Arthur J. Gallagher & Co. has announced an agreement to acquire the partnership interests of BCHR Holdings, LP, dba Buck.
Buck is a provider of retirement, HR and employee benefits consulting and administration services. The organization has a long history, dating back more than 100 years, with a diverse client base by both size and industry. With over 2,300 employees, including more than 220 credentialed actuaries, Buck primarily serves customers throughout the U.S., Canada and the U.K.
According to a press release, the benefits of the acquisition are expected to include:
- expanding Gallagher's value proposition within retirement, benefits & HR consulting, administration and technology;
- enhancing and deepening Gallagher's broad suite of professional services including defined benefits consulting, plan administration, defined contribution and executive benefit consulting, investment consulting, benefits strategy, compliance, employee engagement consulting and total rewards optimization;
- adding "bSuite," a leading, proprietary software platform for benefits administration and employee engagement;
- providing potential cross-selling opportunities across current benefits and property & casualty clients;
- combining similar sales cultures, both focused on outstanding client service, employee engagement and innovation; and
- deepening the employee benefits management team.
Under the agreement, Gallagher will acquire the partnership interests of BCHR Holdings, LP and its subsidiaries, for a gross consideration of $660 million or approximately $585 million net of agreed seller funded expenses and net working capital. Gallagher expects to fund the transaction via free cash flow and short-term borrowings. The transaction is estimated to be approximately 2% accretive to adjusted diluted earnings per share over the trailing 12-month period ended Sept. 30, 2022, assuming expense synergies discussed below.
The transaction is expected to close during the first half of 2023, subject to customary regulatory approvals. Prior to expected expense synergies of approximately $20 million, Buck's pro forma adjusted trailing 12-month revenues and EBITDAC ending Sept. 30, 2022, were approximately $280 million and $34 million, respectively. Including synergies, the purchase multiple is approximately 10.8x of trailing 12-month Sept. 30, 2022 pro forma adjusted EBITDAC, or 13.1x including expected integration expense of approximately $125 million.
Arthur J. Gallagher & Co. is a global insurance brokerage, risk management and consulting services firm, headquartered in Rolling Meadows, Illinois. Gallagher provides these services in approximately 130 countries around the world through its owned operations and a network of correspondent brokers and consultants.
