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Willis Group Strengthens Swedish Presence

Zacks Equity Research

Willis Group Holdings plc (WSH) will take over a 75% equity interest in Max Matthiessen for $205 million. This deal underlines the company’s efforts to strengthen its presence in Sweden.

Sweden-based Max Matthiessen is a leading employee benefits advisor in retirement savings, health plans and personal insurance and has been a Willis’ strategic partner for five years. Its employees and Altor Fund III equally own Max Matthiessen. Following the acquisition, a 25% stake will remain with the employees and Willis will have a 75% interest for a consideration $205 million (of 1.357 billion Swedish Kronor). A strong financial position well supports the company’s strategic acquisitions.

The acquisition will help Willis solidify its global Human Capital and Benefits practice besides ramping up its inorganic growth profile. In addition, the combined entity will emerge as the biggest risk advisor and broker in the Nordic region and the leading international advisor in Sweden.

While Willis will deploy Max Matthiessen’s employee benefits product portfolio to leverage its presence in and beyond Sweden, Max Matthiessen will benefit from Willis’ international exposure. This in turn will improve operational performance mutually.

Willis Group and its subsidiaries have been adopting an inorganic route to expand business and their global footprint to boost their growth trajectory. Willis Group announced that it will acquire Charles Monat Limited, a market-leading life insurance solutions advisor in January. Willis North America acquired Alabama-based Capital Strategies Group, Inc., an employee-benefits consulting division of Birmingham. The Charles Monat takeover will help Willis to boost its international presence, in particular Asia, with the Global Wealth Solutions practice of the former.

Willis presently carries a Zacks Rank #5 (Strong Sell). With a dismal first-quarter performance wherein the bottom line missed both the Zacks Consensus Estimate and year-ago number, the stock witnessed a downward revision in estimates. However, with optimism surrounding the current acquisition, we expect analysts to raise their estimates exerting upward pressure on Zacks Rank.

Other insurance brokers who recently acquired equity interest in other companies include Marsh & McLennan Agency LLC (MMA.V), a subsidiary of Marsh & McLennan Companies, Inc. (MMC), Brown & Brown, Inc. (BRO) and Arthur J Gallagher & Co. (AJG). Arthur J Gallagher & Co. has inked a deal to take over an 87% stake in Noraxis Capital Corporation from RSA Insurance Group plc for $400.3 million to strengthen its presence in Canada. Marsh & McLennan Agency has acquired Friendswood, TX-based VISICOR, a full-service employee benefits brokerage and consulting firm. Brown & Brown, Inc. acquired the operating assets of Pacific Resources Benefits Advisors, LLC.

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