AUB Group will retain full control of the Tysers UK retail business after a joint venture with PSC Insurance Group failed to be agreed, while the company today also announced a $150 million equity raising and a profit upgrade. 
 
The proposed joint venture was initially announced last year and was due to take effect from the start of this month, but PSC advised on April 28 that the start had been delayed as terms remained under discussion.  
 
As reported in a Breaking News this morning, both companies released statements today advising that the venture would not go ahead. 
 
“The business is pleased to be retaining 100% of Tysers UK Retail. It is a high-performance business which continues to demonstrate attractive profitability and is strategically aligned with AUB’s retail broking expertise,” AUB Group CEO Mike Emmett said. 
 
“I would also like to compliment PSC for the professional and accommodating approach it has adopted throughout the process, respecting that the parties have been unable to reach an outcome that aligns to each group’s strategic objectives.” 
 
Mr Emmett told an investor briefing that the key unresolved issue centred around PSC’s wish to own all of the retail business. 
 
“Fundamentally, they wanted to be 100% owners of the business and we didn’t want to fully exit the business,” he said. “There were other items still being discussed and points of difference, however that was the fundamental one.” 
 
Mr Emmett said AUB was always positive about the retail operations, but had planned a joint venture in considering a balance of risk and return for shareholders, with the group making a large offshore acquisition. 
 
AUB will proceed with a $150 million equity raising as a result of no longer receiving an expected $100 million from PSC under the proposed deal. The raising will increase financial flexibility and balance sheet strength, with group having spent or committed to spend an expected $149 million on bolt-on acquisitions this financial year. 
 
Mr Emmett flagged that acquisition areas of interest for the group include agencies, as well as specialty brokers in Australia, while it is also seeking to boost its general broking scale in New Zealand and may now look at UK retail bolt-on opportunities. 
 
AUB also announced today that it is upgrading its full-year guidance, with underlying net profit now expected to be $120-124 million, compared to the previous guidance range of $112.9-121.4 million. 
 
Mr Emmett says the upgraded guidance “is reflective of the continued excellent performance of all parts of AUB” and Tysers continues to perform ahead of expectation with cost synergy delivery on track and revenue synergies to flow next financial year. 
 
PSC’s April 28 statement had said finalisation of the Tysers deal had been delayed as the companies continued “to discuss a number of commercial items, including the intended term of the joint venture and the terms and rights between PSI and AUB companies on conclusion of the joint venture”. 
 
The company today said that further to its April notice, it has formally ended discussions regarding the memorandum of understanding for the proposed joint venture on the Tysers Retail business”. 
 
“The group has a solid pipeline of acquisitions and our balance sheet is in a strong position to 
continue to grow this with our selective and disciplined M&A strategy,” it said. 
 
AUB Group last year entered into an agreement to acquire UK-based Lloyd’s wholesale broker Tysers for $880 million.