Willis acquires broking giant HRH

Willis has acquired North American broking giant Hilb Rogal & Hobbs in a blockbuster $2.1bn deal.

The acquisition will double Willis’s North America revenues and strengthen its position in attractive growth markets, the company said in a statement. Chairman Joe Plumeri described the move as "transformational."

HRH generated $800 million of revenues in 2007, with $57 million from its international operations, which are based in London, following its acquisition of Glencairn in January last year.

HRH's UK business had a brokerage of £27.2m and posted pre-tax profits of £4.7m, according to its 2006 results. It placed 31st in Insurance Times' 2007 Top 50 broker list.

In addition to Glencairn, the London HRH Group consists of wholesale property and casualty broker NIB, and treaty reinsurance broker, HRH Re.

“It is truly transformational for our North America business. Only HRH has the scale and fit in attractive growth areas to take our business to the next level.

Joe Plumeri

The transaction has an equity value of approximately $1.7 billion and an enterprise value of approximately $2.1 billion, according to an official statement. This represents a multiple of HRH's brokerage of 2.4, based on its projected earnings for 2008.

Joe Plumeri, Chairman and chief executive of Willis said: “This dynamic transaction is all about growth. It’s truly transformational for our North America business. Only HRH has the scale and fit in attractive growth areas to take our business to the next level.

“HRH’s complementary strengths and geographic footprint will help us accelerate the performance momentum we’ve achieved through our Shaping our Future strategy.”

Willis will acquire all of the outstanding shares of common stock of HRH for $46.00 per share, 50 per cent cash and 50 per cent stock.

The transaction is expected to close in the fourth quarter of this year.