Arthur J. Gallagher & Co. (NYSE:AJG), Expands Its Vision Across The Pacific

by James Karedelli | Monday, Apr 14, 2014 | 8172 views

Boston, MA, 04/14/2014  (usastockreport) –  Arthur J. Gallagher & Co. (NYSE:AJG), the U.S. based insurance broker, which in recent times has been involved in mergers and acquisitions activities would expand the scope of operations beyond the borders of the United States. It has offloaded shares worth $821.8 million in its latest equity offering to help finance its acquisition related activities.

The Itasca, Illinois based Company shed 19 million shares at $43.25 per share, which was below the stocks yesterday’s closing price in New York Stock Exchange. Morgan Stanley and Bank of America Corp. were the lead investment bankers for this offering.

The Insurance broking company’s chief Executive Officer J. Patrick Gallagher finalized a deal on April 6, 2014 to pay $950 million for the purchase of Westfarmes Limited’s insurance-brokerage operation. The Perth, Australia based company, would be the largest acquisition by Arthur J. Gallagher & Co. (NYSE:AJG) since it expanded in the U.K. by purchasing the Oval Group and the Giles Group of Companies.

Wesfarmers Limited began operation in 1914 as a farmers’ co-operative, would be focusing on industries including retail. This change of business focus was effected post a December 2013 agreement wherein it sold its underwriting business to Insurance Australia Group Ltd. for A$1.85 billion.

As per Mr. J Patrick Gallagher, the Westfarmes acquisition would help them enhance their presence in the Australia-New Zealand region in a manner that may have taken them almost a decade, had they decided to grow in these countries organically.

Gallagher stock price closed at $43.66 in New York Stock Exchange, which was comparable to $46.84 on April 4, the day before the Westfarmes deal was announced.

Gallagher stock price in the last one year has risen only by 5.1 percent. This growth pales when compared against the 26 percent gain recorded by its major competitor i.e. the New York-based insurance broker Marsh & McLennan Cos. Stock price. The role of an insurance broker is to help commercial clients purchase the necessary insurance cover from insurance companies and collect fees that is tied to the size of the premium.

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