Arthur J. Gallagher (AJG) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition expands presence in the U.S. commercial middle market and specialty insurance segments, leveraging expertise, data, and analytics for new business opportunities.

• Deepens capabilities in niche practice groups such as transportation, energy, healthcare, government contractors, and public entity.

• Adds scale, expertise, and talent in the U.K. and Ireland, supporting global growth and ongoing tuck-in M&A strategy.

• Combines two highly compatible, entrepreneurial, sales-based cultures with experienced leadership.

• Strategic transaction accelerates future growth and delivers double-digit adjusted EPS accretion.

Financial terms and conditions

• Gross purchase price is $13.45 billion, reduced to $12.45 billion after a $1 billion deferred tax asset; net EBITDAC multiple is 11.3x after synergies.

• Pro forma trailing 12-month revenue is $2.9 billion, with adjusted EBITDA of $938 million, rising to $1.1 billion including $160 million in synergies.

• Pro forma acquired operations expected to be 10–12% accretive to trailing twelve-month adjusted GAAP EPS as of September 2024.

• No debt or earnout assumed from the acquired company; sellers will not take stock as part of the consideration.

• Financing will be a mix of long-term debt, short-term borrowings, cash, free cash flow, and common equity, maintaining a prudent leverage ratio and investment grade rating.

Synergies and expected cost savings

• Estimated $160 million in synergies, with about one-third from revenue and the rest from cost efficiencies, to be realized within two years of closing.

• Revenue synergies from commission adequacy, premium finance income, and internal wholesaler utilization.

• Expense synergies from leveraging centers of excellence, real estate, and operating expense savings.

• Integration will leverage offshore centers of excellence, with $30–$40 million in annual run-rate savings anticipated.

• Integration costs estimated at $500 million over three years, including $200 million in non-cash stock retention awards.