Jardine Lloyd Thompson PLC (LON:JLT) shares leapt on Tuesday on news the firm agreed to be taken over by US financial services giant Marsh & McLennan Companies Inc (NYSE:MMC) in an all-cash deal that values the UK insurance and reinsurance broker at about £4.3bn (US$5.7bn).
Shareholders in the FTSE 250-listed firm will receive 1,915p per share, a premium of about 33.7% to JLT’s closing price on Monday of 1,432p. In late afternoon trading, JLT's shares were 30% higher at 1,874p, suggesting the market does not expect any counter-bidder to emerge.
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In a statement, Marsh & McLennan said the transaction will be funded by a combination of cash on hand and proceeds from debt financing.
The US firm said the acquisition of JLT accelerates its strategy “to be the preeminent global firm in the areas of risk, strategy and people.”
It anticipates annual cost synergies of approximately US$250mln to be realised over the next three years, which will result in one-time integration costs of around US$375mln.
Marsh & McLennan added that it expects the transaction to be immediately accretive to adjusted cash earnings per share and, as modelled, to produce a double-digit internal rate of return.
Compelling value proposition
Dan Glaser, president and chief executive officer of Marsh & McLellan commented: “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.”
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.
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