Marsh & McLennan Companies acquires Jardine Lloyd Thompson Group for USD 6.4 billion

Marsh & McLennan Companies has announced today it has reached an agreement to acquire Jardine Lloyd Thompson Group plc for a total consideration of USD 6.4 billion, as part of its strategy to be the preeminent global firm in the areas of risk, strategy and people.

JLT's track record of strong organic growth and attractive geographic diversification enhance MMC's ability to accelerate growth and margin expansion across products and geographies. Jardine Lloyd Thompson Group plc is a leading provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services, while MMC acts globally as a professional services global firm offering clients advice and solutions in risk, strategy and people.

The transaction has been approved by the Board of Directors of each of MMC and JLT. Under the terms of the transaction, holders of JLT's common shares will receive cash consideration of GBP 19.15 per share. Total cash consideration equates to USD 5.6 billion infully diluted equity value, or an estimated enterprise value of USD 6.4 billion. The transaction will be funded by a combination of cash on hand and proceeds from debt financing.

"The acquisition of Jardine Lloyd Thompson creates a compelling value proposition for our clients, our colleagues and our shareholders. The complementary fit between our companies creates a platform to deliver exceptional service to clients and opportunities for our colleagues. On a personal level, I have come to know, and respect, Dominic BURKE and his management team from my time both at MMC and as an underwriter. I am confident that with the addition of the talented colleagues of JLT, Marsh & McLennan will be an even stronger and more dynamic company," said Dan GLASER, President and Chief Executive Officer of MMC.

Following completion of the transaction, Mr. BURKE, Group Chief Executive of JLT, will join MMC as Vice Chairman and serve as a member of MMC's Executive Committee.

Dominic BURKE said "I am enormously proud of what JLT has achieved, founded on our people, our culture and our unwavering commitment to our clients. MMC is, and always has been, one of our most respected competitors and I believe that, combined, we will create a group that will truly stand as a beacon for our industry."

JLT was created in 1997 when Jardine Insurance Brokers plc, which was formed almost 50 years ago, merged with Lloyd Thompson Group plc. The firm now operates in 40 countries with particular strength in the UK and Australia as well as in key emerging markets across Asia and Latin America.

Through its Specialty business, JLT provides risk and insurance broking advice to energy, mining, healthcare, construction, marine, and aerospace sectors as well as in financial lines, political risk and trade credit. JLT Re delivers world class risk analysis and risk transfer solutions to its insurer clients across all classes of treaty and facultative reinsurance. JLT's Employee Benefits team acts as advisors, brokers and service providers in the areas of pensions consultancy and administration, employee benefits and wellness, life insurance, and wealth management.

Financial Terms

Under the terms of the transaction, MMC will acquire all issued, and to be issued, share capital of JLT for consideration of GBP 19.15 per share in cash. On the basis of the closing price of JLT shares on September 17, 2018 of GBP 14.32 this represents a 33.7% premium.

We anticipate annual cost synergies of approximately USD 250 million that will be realized over the next three years. It is expected that the realization of these cost synergies will result in one-time integration costs of approximately USD 375 million.

We expect the transaction to be immediately accretive to adjusted cash EPS and, as modeled, will produce a double-digit internal rate of return. On an adjusted GAAP EPS basis, we anticipate the deal will be modestly dilutive in 2019, but we expect it to be neutral to adjusted GAAP EPS in 2020.

Transaction Details

MMC has committed bridge financing from Goldman Sachs to satisfy certain funds requirements of the U.K. Takeover Code to complete the transaction. The transaction is intended to be effected by means of a U.K. court-sanctioned scheme of arrangement and is expected to close in spring of 2019, subject to receipt of required antitrust and regulatory approvals and the approval of JLT shareholders. MMC has received irrevocable undertakings from JLT's largest shareholder, Jardine Matheson Holdings, and JLT directors who collectively represent 40.5% of the issued and outstanding JLT shares in support of the transaction.

Advisors

Goldman Sachs acted as financial advisor and Slaughter and May and Wachtell, Lipton, Rosen & Katz acted as external legal counsel to MMC. J.P. Morgan Chase served as financial advisor, and Clifford Chance Rogers & Wells served as external legal counsel to JLT.

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