JMHLY Jardine Matheson Holdings Ltd (PK)

By Philip Georgiadis and Adam Clark 

LONDON -- Marsh & McLennan Cos. has agreed to a GBP4.3 billion-pound ($5.66 billion) deal to buy U.K.-based Jardine Lloyd Thompson Group PLC, forming a global insurance broker with $17 billion in annual revenue.

The deal will allow Marsh & McLennan to tap into Jardine Lloyd Thompson's exposure to high-growth emerging markets and comes as the insurance industry experiences a wave of consolidation.

Many global insurers are looking beyond their already well-insured home markets for growth, and Marsh & McLennan said the deal will strengthen its specialty risk-broking operations and expand its global reinsurance network, bolstering its position in key growth markets in Asia and Latin America.

While Marsh & McLennan currently derives 10% of its revenue from the fast-growing Asia Pacific region, Jardine Lloyd Thompson has far more exposure in a region which accounts for more than a quarter of its revenues, according to brokerage firm Olive Tree Financial.

The deal is one of the most significant in the insurance brokering sector since the $18 billion tie-up between Willis Group Holdings PLC and Towers Watson & Co. in 2015. Several landmark deals have been announced so far this year as insurers grapple with changing regulatory requirements, falling prices and shifting customer behavior.

Earlier this year, British insurer Prudential PLC split itself into two, allowing one of its arms to chase high-growth emerging markets, while French giant AXA SA paid more than $15 billion to buy XL Group, a Bermuda-based property and casualty firm.

Marsh & McLennan said it would accelerate Jardine Lloyd Thompson's growth in employee-benefits provision and its U.S. expansion, and that its revenue is expected to increase to around $17 billion following the deal, from around $14 billion currently. The deal is expected to result in annual cost savings of $250 million over the next three years.

Marsh & McLennan said it expects to cut between 2% and 5% of the combined workforce of the two companies across all geographies, with the one-off costs of integration estimated at $375 million.

Jardine Lloyd Thompson's independent directors have recommended the deal to the company's shareholders.

Marsh & McLennan has received a commitment to support the bid from Jardine Matheson Holdings Ltd., which has a 40% stake in Jardine Lloyd Thompson. In a separate statement, Jardine Matheson said it would receive net proceeds of GBP1.7 billion from the deal.

The deal is expected to close in spring 2019, subject to shareholder and regulatory approval.

Following the deal, Jardine Lloyd Thompson's Chief Executive Dominic Burke will join Marsh & McLennan as vice chairman and serve on its executive committee.

Write to Philip Georgiadis at philip.georgiadis@wsj.com

(END) Dow Jones Newswires

September 18, 2018 07:46 ET (11:46 GMT)

Jardine Matheson (PK) (USOTC:JMHLY)
Historical Stock Chart
From Mar 2024 to Apr 2024

Jardine Matheson (PK) (USOTC:JMHLY)
Historical Stock Chart
From Apr 2023 to Apr 2024