Benefits & Pensions
Gallagher acquires Buck, a major HR and employee benefits firm, in $660 million deal
There has been a major acquisition in the HR and employee benefits space.
Arthur J. Gallagher announced today that it has acquired Buck, an international provider of retirement, HR and employee benefits consulting and administration services, for $660 million U.S.
Jack Frecker, CEO of Buck, called it “an exciting and noteworthy milestone” for the company.
“Buck is thrilled to be bringing our industry-leading capabilities to Gallagher’s best-in-class organization,” said Frecker. Founded more than 100 years ago, Buck has a long history of serving employers.
Buck has 2,300 employees, including more than 220 credentialed actuaries, and serves customers throughout Canada, the United States and the United Kingdom.
The heart of Gallagher’s mission
J. Patrick Gallagher, Jr., the chairman, president and CEO of Gallagher, said providing a comprehensive suite of products and services that allows employers to attract, engage and retain talent is the heart of the company’s mission.
“Through the complementary strengths of Buck’s defined benefit offerings, investment consulting, digital employee engagement platform and international footprint, the acquisition will broaden, deepen and enhance our client offerings,” he said. “I look forward to welcoming the 2,300 new colleagues joining us as part of this transaction to our growing Gallagher family of professionals.”
The transaction is expected to close during the first half of 2023, subject to customary regulatory approvals.
Benefits of acquisition
According to Gallagher, benefits of the acquisition are expected to include:
- Expanding Gallagher’s value proposition within retirement, benefits and HR consulting, administration, and technology
- Enhancing and deepening Gallagher’s broad suite of professional services including: defined benefits consulting, plan administration, defined contribution and executive benefit consulting, investment consulting, benefits strategy, compliance, employee engagement consulting and total rewards optimization.
- Adding “bSuite,” a leading, proprietary software platform for benefits administration and employee engagement.
- Potential cross-selling opportunities across current benefits and property & casualty clients.
- Combining similar sales cultures, both focused on outstanding client service, employee engagement and innovation.
- Deepening the employee benefits management team.
Under the agreement, Gallagher will acquire the partnership interests of BCHR Holdings, L.P. and its subsidiaries, for a gross consideration of $660 million (all figures U.S.) or about $585 million net of agreed seller funded expenses and net working capital. Gallagher expects to fund the transaction via free cash flow and short-term borrowings.
The transaction is estimated to be approximately two per cent accretive to adjusted diluted earnings per share over the trailing twelve month period ended Sept. 30, 2022, assuming expense synergies discussed below.
Prior to expected expense synergies of about $20 million, Buck’s pro forma adjusted trailing twelve month revenues and EBITDAC ending Sept. 30, 2022 were approximately $280 million and $34 million, respectively. Including synergies, the purchase multiple is approximately 10.8x of trailing twelve month September 30, 2022 pro forma adjusted EBITDAC, or 13.1x including expected integration expense of approximately $125 million.
Arthur J. Gallagher & Co. a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. Gallagher provides these services in approximately 130 countries around the world through its owned operations and a network of correspondent brokers and consultants.
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