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Arthur J. Gallagher (AJG) Buys Remainder of Hesse & Partner

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Arthur J. Gallagher & Co. AJG recently acquired the remaining shares of Hesse & Partner AG and Hesse Consulting GmbH from founder, Guido Hesse. Terms of the transaction were kept under wraps. Arthur J. Gallagher had formed the partnership with Hesse and Partner three years ago when it acquired a majority interest in the business.

Founded in 1997, Zurich, Switzerland-based Hesse and Partner is focused on providing risk management and insurance solutions to the companies in the industrial and service provider sectors, with expertise in the growing waste-to-energy sector.

This acquisition will fortify the acquirer’s presence in Europe. Further, this transaction will boost the insurance services of Arthur J. Gallagher.

Inorganic Growth Story

Acquisitions enable Arthur J. Gallagher to expand into desirable geographic locations, extend its presence in retail and wholesale insurance and reinsurance brokerage services markets, and increase the volume of general services currently provided. Its inorganic pipeline remains strong, with around $250 million of annualized revenues associated with 40 term sheets signed or being prepared.

Arthur J. Gallagher currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the first quarter, the insurance broker completed five brokerage mergers, representing about $90 million of estimated annualized revenues. So far this year, it has made 14 acquisitions. Revenue growth rates have generally been 5-15% for 2021 acquisitions. The buyouts provide the company with incremental capabilities and services to assist clients across Australia, the U.K., Europe and the United States. The company remains focused on its long-term growth strategies of delivering organic revenue growth, and pursuing mergers and acquisitions.

Other Acquisitions in the Same Space

There have been a host of acquisitions in the insurance space of late, given significant capital availability. In the ongoing second quarter of 2021, Brown & Brown, Inc. BRO acquired substantially all Piper Jordan assets. Marsh & McLennan Companies, Inc.’s MMC unit Marsh & McLennan Agency LLC (“MMA”) recently acquired PayneWest Insurance, one of the largest independent agencies in the United States. Alleghany Corporation’s Y wholly-owned subsidiary Alleghany Capital Corporation acquired Wilbert, Inc. (WPS).

Price Performance

Shares of Arthur J. Gallagher have gained 46.9% in a year, outperforming the industry’s increase of 36.6%. Efforts to ramp up the company’s growth profile and capital position should help shares retain the momentum.

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Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report

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