Arthur J. Gallagher & Co. (AJG:US), the insurance broker expanding beyond the U.S. through acquisitions, sold about $821.8 million of shares in an equity offering to help fund its latest deal.
Gallagher sold 19 million shares at $43.25 apiece, below yesterday’s closing price in New York, the Itasca, Illinois-based company said in a statement distributed by PR Newswire. Morgan Stanley and Bank of America Corp. led the offering.
Chief Executive Officer J. Patrick Gallagher reached a deal April 6 to pay A$1.01 billion ($950 million) to buy the insurance-brokerage operation of Perth, Australia-based Wesfarmers Ltd. (WES) The purchase will be the largest by Gallagher, which expanded (AJG:US) in the U.K. by buying Oval Group and the Giles Group of Companies.
“This builds up New Zealand in a way that we probably couldn’t have accomplished” over the next decade, J. Patrick Gallagher said in an April 7 conference call. “Same is true with Australia.”
Gallagher closed at $43.66 in New York. That compares with $46.84 on April 4, the last trading day before the deal was announced.
Gallagher has climbed 5.1 percent in the past year, compared with the 26 percent gain of New York-based insurance broker Marsh & McLennan Cos. Brokers help commercial clients purchase coverage from insurers, collecting fees tied to the size of premiums.
Wesfarmers, which started in 1914 as a farmers’ co-operative, is focusing on industries including retail after agreeing in December to sell its underwriting business to Insurance Australia Group Ltd. for A$1.85 billion.
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