ROLLING MEADOWS, Ill.,
Dec. 20, 2022 /PRNewswire/ --
Arthur J. Gallagher & Co. (NYSE:
AJG) today announced an agreement to acquire the partnership
interests of BCHR Holdings, L.P., dba Buck. The transaction
is expected to close during the first half of 2023, subject to
customary regulatory approvals.
Buck is a leading provider of retirement, HR and employee
benefits consulting and administration services. The organization
has a long history, dating back more than 100 years, with a diverse
client base by both size and industry. With over 2,300 employees,
including more than 220 credentialed actuaries, Buck primarily
serves customers throughout the US, Canada and the UK.
"Providing a comprehensive suite of products and services that
allows employers to attract, engage and retain talent is at the
heart of Gallagher Benefit Services' mission and our global
Gallagher Better Works value
proposition," said J. Patrick Gallagher,
Jr., Chairman, President and CEO. "Through the complementary
strengths of Buck's defined benefit offerings, investment
consulting, digital employee engagement platform and international
footprint, the acquisition will broaden, deepen and enhance our
client offerings. I look forward to welcoming the 2,300 new
colleagues joining us as part of this transaction to our growing
Gallagher family of professionals."
Benefits of the acquisition are expected to include:
- Expanding Gallagher's value proposition within retirement,
benefits & HR consulting, administration, and technology
- Enhancing and deepening Gallagher's broad suite of professional
services including: defined benefits consulting, plan
administration, defined contribution and executive benefit
consulting, investment consulting, benefits strategy, compliance,
employee engagement consulting and total rewards
optimization
- Adding "bSuite," a leading, proprietary software platform for
benefits administration and employee engagement
- Potential cross-selling opportunities across current benefits
and property & casualty clients
- Combining similar sales cultures, both focused on outstanding
client service, employee engagement and innovation
- Deepening the employee benefits management team.
Financial Terms
Under the agreement, Gallagher will
acquire the partnership interests of BCHR Holdings, L.P. and its
subsidiaries, for a gross consideration of $660 million or approximately $585 million net of agreed seller funded expenses
and net working capital. Gallagher expects to fund the
transaction via free cash flow and short-term borrowings. The
transaction is estimated to be approximately 2% accretive to
adjusted diluted earnings per share over the trailing twelve month
period ended September 30, 2022,
assuming expense synergies discussed below.
Prior to expected expense synergies of approximately
$20 million, Buck's pro forma
adjusted trailing twelve month revenues and EBITDAC ending
September 30, 2022 were approximately
$280 million and $34 million, respectively. Including
synergies, the purchase multiple is approximately 10.8x of trailing
twelve month September 30, 2022 pro
forma adjusted EBITDAC, or 13.1x including expected integration
expense of approximately $125
million.
About Arthur J. Gallagher
& Co.
Arthur J. Gallagher
& Co. (NYSE:AJG), a global insurance brokerage, risk management
and consulting services firm, is headquartered in Rolling Meadows, Illinois. Gallagher provides
these services in approximately 130 countries around the world
through its owned operations and a network of correspondent brokers
and consultants.
Information Regarding Forward-Looking
Statements
This press release contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements relate to
expectations or forecasts of future events and use words such as
"anticipate," "believe," "estimate," "expect," "contemplate,"
"forecast," "project," "intend," "plan," "potential," and other
similar terms, and future or conditional tense verbs like "could,"
"may," "might," "see," "should," "will" and "would." Examples of
forward-looking statements in this press release include, but are
not limited to, statements regarding the expected timing of the
completion of the Buck acquisition, the benefits of the proposed
acquisition with respect to our client offerings and value
proposition, among other expected benefits, the expected
consideration to be paid, the expected revenue, EPS and EBITDAC
impacts of the acquisition, the expected expense synergies,
required regulatory approvals, the expected expense of integration,
and the anticipated methods of financing the acquisition.
Forward-looking statements are not guarantees of future performance
and they involve risks, uncertainties and assumptions. Our
future performance and actual results or outcomes may differ
materially from those expressed in such forward-looking statements.
Many of the factors that will determine these results are beyond
our ability to control or predict. Accordingly, you should
not place undue reliance on forward-looking statements, which speak
only as of, and are based on information available to us on, the
date on which they are made.
Such risks and uncertainties that could cause actual results to
differ materially from our published expectations include, among
others, (a) risks related to the integration of Buck into our
company; (b) the possibility that the proposed acquisition is not
completed when expected or at all because required regulatory
approvals are not received or other conditions to the closing are
not satisfied on a timely basis or at all; (c) the risk that our
free cash flow is insufficient, or the financing required to fund
the proposed transaction is not obtained on the terms anticipated
or at all; (d) potential adverse reactions or changes to business
or employee relationships, including those resulting from the
announcement or completion of the acquisition; (e) the possibility
that the anticipated benefits of the acquisition, including expense
synergies, are not realized when expected or at all, including as a
result of the impact of, or issues arising from, the integration of
the acquired operations into our company; (f) the possibility that
the acquisition may be more expensive to integrate than
anticipated, including as a result of unexpected factors or events;
(g) diversion of management's attention from ongoing business
operations and opportunities; (h) the inability to retain certain
key employees of the acquired operations or Gallagher; (i)
competitive responses to the acquisition; (j) uncertainties as to
the timing of the completion of the acquisition and the ability of
each party to consummate the acquisition; and (k) additional
factors discussed in the section entitled "Information Concerning
Forward-Looking Statements" in Gallagher's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2022 and "Risk
Factors" in Gallagher's Annual Report on Form 10-K for the fiscal
year ended December 31, 2021 and any other reports we file with the
SEC in the future.
Any forward-looking statements speak only as of the date that
they are made, and we do not undertake any obligation to update any
such statements or release publicly any revisions to these
forward-looking statements to reflect events or circumstances after
the date of this report or to reflect new information, future or
unexpected events or otherwise, except as required by applicable
law or regulation.
Non-GAAP Measures
This press release includes
references to Adjusted EBITDAC, which is a measure not in
accordance with, or an alternative to, the GAAP information
provided herein. Gallagher believes that Adjusted EBITDAC, as
defined below, provides a meaningful representation of its
operating performance and improves the comparability of Gallagher's
results between periods by eliminating the impact of certain items
that have a high degree of variability. EBITDAC is defined as net
earnings before interest, income taxes, depreciation, amortization
and the change in estimated acquisition earnout payables. Adjusted
EBITDAC is EBITDAC adjusted to exclude net gains on divestitures,
acquisition integration costs, workforce related charges, lease
termination related charges, acquisition related adjustments,
transaction related costs, legal and income tax related costs and
the period-over-period impact of foreign currency translation, as
applicable. The most directly comparable GAAP measure is earnings
from continuing operations. Please see "Reconciliation of Non-GAAP
Measures" on Gallagher's website at www.ajg.com under "Investor
Relations" for the purpose of this measure.
Investors:
Ray Iardella
VP - Investor Relations
(630)
285-3661/ Ray_Iardella@ajg.com
Media:
Kelli
Murray
Director Global Public Relations
(630) 277-0347/ Kelli_Murray@ajg.com
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