Gallagher sells shares to pay for Wesfarmers deal
Arthur J Gallagher (AJG) is offering up to 21.8 million shares of its common stock to cover the cost of buying the Wesfarmers’ broking businesses and associated premium funding companies.
The US-based global broker has agreed to pay $1.01 billion for OAMPS in Australia and the UK and Crombie Lockwood in New Zealand.
The deal, which is subject to regulatory approval and is expected to be finalised by June 30, is the largest transaction AJG has ever been involved in.
The share offer is for 19 million shares priced at $US43.25 ($46), with the underwriters in the offering being given a 30-day option to purchase up to 2.85 million more shares at the same price. The offer will close on Wednesday.
AJG is the fourth-largest global broker and has become more acquisitive only recently.
Last August it bought US national brokerage Bollinger for $US276.5 million ($294.4 million) and in September it paid £233 million ($414 million) for major UK brokerage Giles Group.
Earlier this month it acquired UK brokerage Oval for £99 million ($176.2 million) and last week – shortly before announcing the deal with Wesfarmers – it also acquired major New Zealand broker Mike Henry for an undisclosed sum.
The purchase from Wesfarmers will make AJG a major player in the local insurance broking business, with Chairman and CEO Pat Gallagher saying last week the company “will become one of the largest insurance brokers in Australia and New Zealand”.
He says the focus of OAMPS and Crombie Lockwood on middle-market clients “aligns well with our global client base and will provide us opportunities to bring our full range of services to their existing clients and prospects”.