US broker Arthur J Gallagher has bought UK rival Heath Lambert in a £97 million ($148 million) deal.

The company says the purchase, which was funded with cash, is expected to break even in 2011, contribute £12 million ($18 million) in pre-tax earnings in 2012 and £20 million ($30.5 million) in pre-tax earnings in 2013.

Aside from Heath Lambert’s 1200 staff and 16 UK offices, Arthur J Gallagher says the acquisition will strengthen its capabilities in such fields as fine art, real estate, employee benefits, major construction, entertainment, affinity relationships and public sector businesses, as well as increase its access to a wide range of retail clients and expand its UK benefits consultancy and advisory services.

Additional UK acquisitions have also been forecast.

“Heath Lambert provides us with a solid platform to grow our broker ranks through targeted recruitments and additional mergers,” said David Ross, CEO of Gallagher’s London-based international brokerage operations.

Arthur J Gallagher Chairman, President and CEO Patrick Gallagher says the acquisition “represents an important strategic move for our company. Since 1974, we’ve been in London primarily as a wholesale broker. Now, Heath Lambert offers us an excellent opportunity to become a large retail broker in one of the best insurance markets in the world.”

Rumours surrounding the deal had been gaining momentum in recent months with Arthur J Gallagher recently raising $US125 million ($117 million) in a private placement to fund acquisitions, and talking about its desire to become established as a retail broker across the UK.

The deal finally brings to a close speculation over Heath Lambert’s future, with the broker understood to have been in acquisition talks with several suitors including Willis, Jardine Lloyd Thompson, Aon and Towergate in recent years.

Marsh purchased the Australia, NZ and PNG operations of Heath Lambert in 2004.