Arthur J Gallagher to buy insurance broker AssuredPartners in $13.5 billion deal

(Reuters) -Arthur J Gallagher said on Monday it has agreed to acquire insurance broker AssuredPartners in a $13.45 billion deal, as it looks to bolster presence in the vast and fast-growing middle-market segment.

Gallagher follows in the footsteps of rival insurance brokers Aon (NYSE:) and Marsh McLennan (NYSE:), which have struck deals worth $13 billion and $7.75 billion, respectively, over the last 12 months to expand their foothold in the middle-market insurance business.

The Insurer, a Reuters publication, exclusively reported on Sunday that Gallagher was close to sealing the deal for AssuredPartners.

Gallagher said the net consideration for the deal 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.

The middle-market insurance business provides services designed for mid-sized firms that make between $10 million and $1 billion in annual revenue.

Private equity firm GTCR, in partnership with Jim Henderson, had founded AssuredPartners in 2011. Since then, the Orlando, Florida-based company has become one of the largest insurance brokers in the United States.

GTCR sold the company to Apax (HN:) Partners in 2015. But again in 2019, an investor group led by GTCR agreed to acquire it from Apax, which held a minority stake in the company.

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.

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.

Last year, Gallagher acquired Cadence Bank’s insurance brokerage unit for $904 million.