Arthur J. Gallagher & Co. AJG recently acquired Finergy Solutions Pty Ltd and Avantek Pty Ltd to bolster its retirement as well as international employee benefits consulting services. The buyout is likely to help the insurance broker strengthen its footprint in Australia. However, financial details of the transaction were kept under wraps.
Details of the Transaction
Finergy Solutions engages in employee benefit and retirement consultant business, specializing in superannuation consulting services, an employer-funded organizational pension programs provided by the Australian government.
Avantek, a sister concern of Finergy Solutions, operates as a technological based company, building tailor-made financial and benefit reports including its Super Score technology. The firm caters to a broad base of individuals, aiding them to get actively involved in the management of their superannuation.
Backed by such service offerings, the above-mentioned companies have created goodwill over a significant period of time. After the completion of the buyout, the company will continue to operate from its current office locations.
Apart from strengthening the already strong inorganic growth portfolio of the acquirer, the latest acquisition is anticipated to fortify its presence in Australia, pertaining to retirement services. The highly customized employee communication abilities are expected to complement the insurance broker’s service portfolio as well as add value to it.
Arthur J. Gallagher’s prudent M&A activity bear testimony to its inorganic growth strategy. The company remains optimistic about its capability to attract acquisition partners in its typical small tuck-in size at fair prices.
Over the past few years, Arthur J. Gallagher’s impressive growth has been primarily fed by organic sales as well as judicious buyouts and mergers. The company has been focusing on its consolidation pipeline in the retail employee benefits brokerage and wholesale brokerage areas, which remains strong with about $ 400 million of revenues. Further, driven by the number and size of non-U.S. buyouts, international contribution to the company’s top line is expected to improve.
Zacks Rank and Share Price Movement
Arthur J. Gallagher carries a Zacks Rank #3 (Hold). Shares of the company have rallied 14.5% in a year’s time, outperforming the industry’s rise of 6.9%. We expect top-line growth, astute acquisitions and a robust capital position to drive the shares higher in the near term.
Other Acquisitions in the Insurance Space
We have observed insurers adopting the inorganic route to strengthen portfolio for some time now. The insurance industry has been grabbing attention of late with a slew of acquisitions on the back of its available capital resource, which remains at an all-time high.
Recently, The Navigators Group, Inc. NAVG closed the buyout of Bracht, Deckers & Mackelbert NV (BDM) as well as its affiliated insurance company, Assurances Continentales – Continentale Verzekeringen NV (ASCO). Also, Brown & Brown, Inc. BRO completed the transaction of Servco Pacific Insurance operations in Hawaii and the Pacific Northwest.
Further, Alleghany Capital Corporation, a wholly-owned subsidiary of Alleghany Corporation Y, announced that its unit Jazwares, LLC has purchased Russ Berrie and Applause brands.
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