London:

Marsh & McLennan Companies Inc has agreed to buy Jardine Lloyd Thompson for about 4.3 billion pounds ($5.7 billion) in cash as the U.S. financial services group looks to boost its speciality risk broking and global reinsurance business.

 

Strategic Rationale

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. JLT 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.

 

Both the re/insurnace brokers have operations in India in the form of joint ventures. JLT holds 49 per cent in the local venture while Marsh has stakes of 26 per cent in the Indian company. Marsh is the largest re/insurer broker in India. It would be worth watching how amalgamation between the two brokers is taking place in India.    

 

“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. I am confident that with the addition of the talented colleagues of JLT, Marsh & McLennan will be an even stronger and more dynamic company,” said Dan Glaser, President and Chief Executive Officer of MMC.
 

The transaction has been approved by the Board of Directors of each of MMC and JLT. Under the terms of the transaction, holders of JLT’s common shares will receive cash consideration of £19.15 pounds per share. Total cash consideration equates to $5.6 billion U.S. dollars in fully diluted equity value, or an estimated enterprise value of $6.4 billion. The transaction will be funded by a combination of cash on hand and proceeds from debt financing.

 

The deal consideration implies an enterprise value of about 4.9 billion pounds for JLT.

 

JLT’s independent directors, advised by J.P. Morgan Cazenove and Simon Robertson Associates, intend to unanimously recommend that shareholders vote in favor of the deal, the companies said.

 

MMC, which expects annual revenue to rise to $17 billion after the deal closes, said JLT chief Executive Dominic Burke is set to join MMC as vice chairman.

 

Goldman Sachs was acting as financial adviser to MMC and MMC’s unit.

 

JLT was created in 1997 when Jardine Insurance Brokers plc, which was formed almost 50 years ago, merged with Lloyd Thompson Group plc. 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.Both the re/insurnace brokers have operations in India and it would be worth watching how operations of both the countries get amalgameted.  

 

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.

 

Slaughter and May and Wachtell, Lipton, Rosen & Katz provided legal advisers to MMC and its unit, while Clifford Chance LLP was legal advisers to JLT.