By Lisa Kerner
Charlotte, N.C., June 9 - Willis Group Holdings Ltd. and Hilb Rogal & Hobbs Co. agreed to combine in a stock and cash transaction valued at $2.1 billion and expected to close in the fourth quarter of 2008.
Under the terms of the companies' definitive agreement, Willis will acquire all of the outstanding shares of common stock of Hilb Rogal for a total consideration of an estimated $46.00 per share subject to a collar, a joint company news release stated.
Stockholders can elect to receive the merger consideration in the form of cash or shares of Willis common stock, subject to proration. Half of the value of the per-share merger consideration, or $23.00, is fixed whether a shareholder elects to receive cash or stock.
The stock component will be calculated based on the average trading price of Willis common stock during the 10-day period ending two days prior to the closing date. If the average Willis stock price during the period is greater than or equal to $31.46 or less than or equal to $40.04, the stock component is fixed and is equal to $23.00.
Outside the collar, the exchange ratio is fixed and the value of the stock component may be worth more or less than $23.00, based on the value of Willis common stock, whether or not a shareholder elects to receive cash or stock, it was explained in the release.
Therefore, the companies said the total merger consideration will be either greater or less than $46.00, depending on the price of Willis stock.
The merger will boost London-based Willis' position in California, Florida, Texas, Illinois, New York, Boston, New Jersey and Philadelphia and expand its retail platform.
The combined company will be renamed Willis HRH and lead by an office of the chairman that will included Hilb Rogal president and chief operation officer F. Michael Crowley and chairman and chief executive officer Martin L. Vaughan III.
The total purchase price of $2.1 billion represents a multiple of 2.4 times estimated 2008 Hilb Rogal revenues and less than 10 times estimated 2008 EBITDA, including the assumption of an estimated $400 million of Hilb Rogal debt, the release said.
Willis said that over time it plans to repurchase a majority of the shares issued in connection with the transaction under its previously approved $1 billion buyback plan.
"Only Hilb Rogal has the scale and fit in attractive growth areas to take our business to the next level," Willis chairman and CEO Joe Plumeri said in the release.
"Hilb Rogal's complementary strengths and geographic footprint will help us accelerate the performance momentum we've achieved through our Shaping our Future strategy," Plumeri added.
Willis was advised by Banc of America Securities LLC, and Hilb Rogal was advised by Sandler O'Neill & Partners, LP.
Banc of America Securities LLC as lead arranger and book manager, and Bank of America NA, as administrative agent, have provided committed financing for the transaction, the release stated.
Willis is an insurance broker with more than 300 offices in 100 countries. The company, based in London, has approximately 16,000 associates.
Hilb Rogal is the eighth-largest insurance and risk management intermediary in the United States, with over 140 offices worldwide. The company is based in Glen Allen, Va.
| Acquirer: | Willis Group Holdings Ltd.
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| Target: | Hilb Rogal & Hobbs Co.
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| Announcement date: | June 9
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| Transaction total: | $2.1 billion
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| Price per share: | About $46.00
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| Expected closing: | Fourth quarter of 2008
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| Stock price of acquirer: | NYSE: WSH: $35.88 on June 6
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| Stock price of target: | NYSE: HRH: $30.89 on June 6
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