Deakin: The price was right for Giles
Arthur J Gallagher won the bid for Giles because it could pay quickly and had the support of Giles’ management team, commercial director Janice Deakin has said.
“I’m not even sure we had the highest number in this case. But we do believe we had the best overall solution for the business,” Deakin told Insurance Times.
“We had a proven track record of doing deals and could make it happen quickly. That was really important.”
Deakin – who joined Gallagher two months ago and leads its acquisition team – said she was “really happy” with the £233m cash Gallagher has agreed to pay for Giles.
At more than nine times its £24.7m earnings before interest, tax, depreciation and amortisation, she said: “The value we can drive from bringing the two businesses together makes the pay back over time really attractive. And we’re getting the benefit of all the work they’ve put in over the years. There are not many Giles out there.”
Gallagher will continue to buy businesses, Deakin said. “We’re not at the end of the road, and we’re geared up to do to it,” she said.
With £57m of revenue, Giles’ retail broker arm is two-and-a-half times bigger than Gallagher’s, and transforms the broker into the third largest retail operation in the UK.
“Overall, retail is a massive step forward and the other businesses fit really well with the Gallagher strategy,” said Deakin.“It’s a big, big strategic platform for the UK market. But it also sits really well with the overall strategy.”
Deakin said the enlarged Gallagher would offer clients more variety, specialisms and underwriting solutions.
“The people fit and the culture feels right. That’s why we feel great about it,” she added.
Deakin said job losses were possible, but insisted: “That’s not the logic behind doing this deal. This is a big growth opportunity for Arthur J Gallagher in the UK. That’s how it’s seen in the US and that’s the strategy behind buying the business.
“The message to staff is this is a great outcome for Gallagher and a great outcome for Giles.”
Deakin said there was an opportunity to grow Giles’ broker networks, Westinsure and Compass Broker Services.
“Some of the other networks have been under a lot of pressure. The network model that we’re picking up takes less value from insurers than some of the others. That’s probably a more sustainable model going forward than some of the others.”
Aviva withdrew from Towergate’s Broker Network and Willis Network’s panel while Deakin was its intermediary and partnership director.
It was “not appropriate” to discuss whether Giles branding would be retained while waiting for regulatory approval, Deakin said. “When we get through completion we’ll talk more about it. We do have a clear view.”
The deal is expected to be approved by regulators in October.
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