Brown & Brown Inc. reported lower organic growth in the third quarter of 2018 but expects growth to improve, the Daytona Beach, Florida-based brokerage said Tuesday, as it also provided more detail on its $730 million cash-and-stock purchase of Minneapolis-based Hays Group Inc.

The deal, announced Monday, will expand Brown & Brown’s employee benefits business and its upper middle-market client base and grow its office network in the Midwest, J. Powell Brown, president and CEO of Brown & Brown, said on a conference call with analysts to discuss the results.

The purchase of privately held Hays, which is expected to close next month, will add the 22nd-largest broker of U.S. business with 2017 brokerage revenue of $197.6 million, according to Business Insurance’s most recent ranking, to Brown & Brown.

Brown & Brown is ranked the eighth-largest brokerage globally and the sixth-largest broker of U.S. business, with $1.86 billion in 2017 U.S. brokerage revenue

The purchase price comprises $605 million in cash, $100 million in stock and up to $25 million in earn-out payments, based on future performance, Mr. Brown said in the conference call.

Brown & Brown expects to incur integration costs of $8 million to $12 million but to achieve synergy savings of between $10 million and $15 million over the next four-to-five years, Mr. Brown said.

Hays, which does business as the Hays Companies, reported gross revenue of $199.1 million in 2017, and Brown & Brown expects the brokerage, which will retain its name and operate as a division within Brown & Brown, to report gross revenue of between $210 million and $220 million in 2019, he said. Hays is expected to report EBITDAC — earnings before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout — of between $47 million and $53 million next year.

Hays’ business mix, which is 53.9% employee benefits, 42.3% retail property/casualty and 3% personal lines, will add significantly to Brown & Brown’s employee benefits revenue, giving the combined operations between $430 million and $440 million in benefits revenue and increasing the segment to 35% of Brown & Brown’s revenue, Mr. Brown said.

“The Hays Companies serves customers in all segments but primarily focuses on the upper middle market. They have a proven track record of starting new businesses, developing talent, growing their business organically,” he said, adding that Hays will increase Brown & Brown’s operations in the Midwest, where it does not have a large presence.

Hays will increase Brown & Brown’s revenue by about 10% and its retail brokerage revenue by about 20%, Mr. Brown said.

“In summary, we’re pumped by the addition of the Hays Companies to the Brown & Brown team,” he said.

Measured as about 14 times EBITDAC, the base purchase price is high compared with other purchases of larger brokerage firms, which usually are around 10 to 11 times EBITDAC, said Timothy J. Cunningham, principal at Optis Partners LLC, a Chicago-based investment banking and financial consulting firm.

“Given the multiple, it’s clearly a very strategic acquisition for Brown & Brown,” he said.

“They have the prospect of organic growth — Hays has a reputation of investing well in talent — and with over half of Hays’ revenue in employee benefits, that gives another value-add to Brown & Brown,” Mr. Cunningham said.

Meanwhile, Brown & Brown reported $530.9 million in total revenue for the third quarter, an 11.6% increase over the same period last year. Like other brokerages, Brown & Brown in 2018 adopted new accounting rules from the Financial Accounting Standards Board that affect when certain revenues are recognized in financial results. Excluding the effect of the new rules, third-quarter revenue increased 6.5% over the 2017 quarter and organic revenue increased 1.4%.

Net income increased 38.9% to $106.1 million.

“Organic revenue growth and margin came in slightly lower than previous quarters,” Mr. Brown said on the call. “Based on what we can see right now, we expect Q4 to be more in line with our performance on a year-to-date basis, excluding the impact of storm-related activity.”

Brown & Brown completed 10 acquisitions with combined annual revenue of $47 million in the third quarter and has completed deals worth more than $98 million in 2018, excluding the Hays acquisition, he said.