Gallagher Stock Priced at $43.25 to Fund Wesfarmers Deal

Arthur J. Gallagher & Co. (AJG), the insurance broker expanding beyond the U.S. through acquisitions, sold about $821.8 million of shares in an equity offering to help fund its latest deal.

Gallagher sold 19 million shares at $43.25 apiece, below yesterday’s closing price in New York, the Itasca, Illinois-based company said in a statement distributed by PR Newswire. Morgan Stanley and Bank of America Corp. led the offering.

Chief Executive Officer J. Patrick Gallagher reached a deal April 6 to pay A$1.01 billion ($950 million) to buy the insurance-brokerage operation of Perth, Australia-based Wesfarmers Ltd. (WES) The purchase will be the largest by Gallagher, which expanded in the U.K. by buying Oval Group and the Giles Group of Companies.

“This builds up New Zealand in a way that we probably couldn’t have accomplished” over the next decade, J. Patrick Gallagher said in an April 7 conference call. “Same is true with Australia.”

Gallagher closed at $43.66 in New York. That compares with $46.84 on April 4, the last trading day before the deal was announced.

Gallagher has climbed 5.1 percent in the past year, compared with the 26 percent gain of New York-based insurance broker Marsh & McLennan Cos. Brokers help commercial clients purchase coverage from insurers, collecting fees tied to the size of premiums.

Photographer: Aaron Bunch/Bloomberg

The Wesfarmers Ltd. logo is displayed outside the Wesfarmers House building, which houses the company's headquarters, in Perth, Australia. Wesfarmers have sold their insurance-brokerage operation to Arthur J. Gallagher & Co. Close

The Wesfarmers Ltd. logo is displayed outside the Wesfarmers House building, which... Read More

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Photographer: Aaron Bunch/Bloomberg

The Wesfarmers Ltd. logo is displayed outside the Wesfarmers House building, which houses the company's headquarters, in Perth, Australia. Wesfarmers have sold their insurance-brokerage operation to Arthur J. Gallagher & Co.

Wesfarmers, which started in 1914 as a farmers’ co-operative, is focusing on industries including retail after agreeing in December to sell its underwriting business to Insurance Australia Group Ltd. for A$1.85 billion.

To contact the reporters on this story: Zachary Tracer in New York at ztracer1@bloomberg.net; Narayanan Somasundaram in Sydney at nsomasundara@bloomberg.net

To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net Dan Reichl, David Scheer

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