Gallagher follows in the footsteps of rivals Aon (AON.N) and Marsh McLennan (MMC.N), which have also struck $13 billion and $7.75 billion, deals, respectively, over the last 12 months to expand into the vast and fast-growing middle-market insurance business.
Middle-market insurance caters to mid-sized businesses that generate annual revenue between $10 million and $1 billion.
The Insurer, a Reuters publication, exclusively reported on Sunday that Gallagher was close to sealing the deal for AssuredPartners.
Gallagher said the deal's net consideration was about $12.45 billion after giving effect to an estimated $1 billion deferred tax asset.
The broad U.S. footprint and middle-market focus of AssuredPartners make it an ideal merger partner, said J Patrick Gallagher, Jr, chairman and CEO of Arthur J Gallagher.
Private equity firm GTCR — which founded AssuredPartners in partnership with insurance industry veteran Jim Henderson — said the deal was the largest sale of a U.S. insurance broker to a strategic acquirer in the industry's history.
Shares of Rolling Meadows, Illinois-based Gallagher fell 1.4% in premarket trading.
AssuredPartners distributes insurance across property and casualty, commercial, employee benefits and personal lines. It generated $2.9 billion in adjusted revenue for the 12 months ended Sept. 30.
GTCR initially owned AssuredPartners from its inception in 2011 till 2015, when it sold the Orlando, Florida-based company to private equity firm Apax Partners.
Again in 2019, an investor group led by GTCR agreed to acquire it from Apax, which held a minority stake in the company.
Gallagher expects to finance the transaction — likely to close during the first quarter of 2025 — through a mix of cash, debt and equity. The deal is expected to boost its adjusted profit by double digit and build on its business in the UK and Ireland.
Separately, Gallagher unveiled an $8.5 billion stock offering to fund the acquisition. It has also secured a $13.45 billion short-term loan.
Last year, Gallagher acquired Cadence Bank's (CADE.N) insurance brokerage unit for $904 million.
