Marsh & McLennan Companies (MMC), a global professional services firm offering clients advice and solutions in risk, strategy and people, yesterday announced that it has reached an agreement to acquire Jardine Lloyd Thompson Group (JLT), a leading provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services.
Under the terms of the transaction, MMC will acquire all issued, and to be issued, share capital of JLT for consideration of GBP19.15 ($25.18) per share. On the basis of the closing price of JLT shares on 17 September 2018 of GBP14.32, this represents a 33.7% premium.
Total cash consideration equates to $5.6bn in fully diluted equity value, or an estimated enterprise value of $6.4bn. The transaction will be funded by a combination of cash on hand and proceeds from debt financing.
The transaction has been approved by the board of directors of each side.
The acquisition of JLT accelerates MMC's strategy to be the preeminent global firm in the areas of risk, strategy and people. JLT's track record of strong organic growth and attractive geographic diversification enhance MMC's ability to accelerate growth and margin expansion across products and geographies.
MMC says in a statement, “We anticipate annual cost synergies of approximately $250m that will be realised over the next three years. It is expected that the realisation of these cost synergies will result in one-time integration costs of approximately $375m.
Mr Dan Glaser, president and CEO of MMC, said, "The acquisition of Jardine Lloyd Thompson creates a compelling value proposition for our clients, our colleagues and our shareholders. The complementary fit between our companies creates a platform to deliver exceptional service to clients and opportunities for our colleagues. On a personal level, I have come to know, and respect, Dominic Burke and his management team from my time both at MMC and as an underwriter. I am confident that with the addition of the talented colleagues of JLT, Marsh & McLennan will be an even stronger and more dynamic company."
Following completion of the transaction, Mr Burke, group chief executive of JLT, will join MMC as vice chairman and serve as a member of MMC's executive committee.
Mr Burke said "I am enormously proud of what JLT has achieved, founded on our people, our culture and our unwavering commitment to our clients. MMC is, and always has been, one of our most respected competitors and I believe that, combined, we will create a group that will truly stand as a beacon for our industry."
JLT was created in 1997 when Jardine Insurance Brokers, which was formed almost 50 years ago, merged with Lloyd Thompson Group. The firm now operates in 40 countries with particular strength in the UK and Australia as well as in key emerging markets across Asia and Latin America.
Through its specialty business, JLT provides risk and insurance broking advice to energy, mining, healthcare, construction, marine, and aerospace sectors as well as in financial lines, political risk and trade credit. JLT Re delivers world class risk analysis and risk transfer solutions to its insurer clients across all classes of treaty and facultative reinsurance. JLT's Employee Benefits team acts as advisors, brokers and service providers in the areas of pensions consultancy and administration, employee benefits and wellness, life insurance, and wealth management.