Sydney-based insurance broker AUB Group (ASX: AUB) has agreed to purchase London-based Lloyd's wholesale insurer broker Tysers for $880 million as it looks to accelerate the scaling up of its agencies.
The binding agreement will be funded through a $350 million equity raise, a new $675 million multi-currency debt facility, and a placement of $176 million worth of shares under escrow for the vendors – meaning the final consideration could be more than $1 billion if revenue targets are achieved.
With the acquisition set to be completed in 1H23, subject to regulatory approvals, AUB is anticipating the deal will increase its underlying pro forma earnings by 30 per cent as it benefits from Tysers direct access to the Lloyd’s market.
“The acquisition represents an important next step in the AUB strategy to build out our client offering and risk expertise. Lloyd’s is the largest insurance market in the world,” AUB Group CEO Mike Emmett said.
“Tysers provides AUB Group the ability to access a diverse range of risks and insurance types for our clients and broker networks in Australia and New Zealand whilst also gaining the capability to accelerate the establishment of new agencies in these markets.”
Tysers is the sixth-largest wholesale broker in Lloyd’s marketplace, with annual gross premiums of $3.6 billion, and operates across wholesale, retail and MGA (managing general agents) segments.
AUB has entered into a separate non-binding agreement to partner with PSC Insurance (ASX: PSI) in a 50/50 joint venture for Tysers’ UK retail division.
“We are excited at the opportunity to partner with AUB for the proposed JV of the Tysers UK retail business,” PSC CEO Tony Robinson said.
“It presents an opportunity for us to secure 50 per cent of a meaningful UK retail broker, which is in line with our strategy to grow in the UK and diversify our insurance intermediary business.”
Tysers existing management will continue to manage the day-to-day operations and 1,100 staff. To help facilitate the integration into the broader AUB group, AUB CEO Mike Emmett and AUB non-executive director Peter Harmer will be appointed to the Tysers board.
“AUB is the perfect partner to allow Tysers to continue our proud history and support our growth ambitions,” Tysers CEO Clive Buesnel said.
“The strategic and cultural alignment is clear, and we are excited about executing on future opportunities together. We are proud of our culture and track record and look forward to working collaboratively and innovatively with AUB.”
Founded in 1985, the AUB Group consists of insurance brokers and underwriting agencies operating across 500 locations throughout Australia and New Zealand, who work with more than 850,000 clients to place $4 billion in insurance premiums with local and foreign insurers.
With a market cap of $1.64 billion, AUB has been listed on the ASX since 2005. The announcement of the acquisition of Tysers, which began trading in the City of London in 1820, has led to a slight drop in AUB’s share price - down 1.34 per cent as of 10.40 AEST.
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