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PARIS-Marsh & McLennan Cos. Inc. will own the largest broker in France after buying French broker Compagnie Europeenne de Courtage d'Assurances et de Reassurances last week for $200 million.
CECAR will be merged with its rival, M&M subsidiary Faugere & Jutheau S.A., at the end of the year, but it is not certain yet who will head the new combined operation, said Philippe Carle, co-president of CECAR. However, there should be no layoffs, because the two brokerages complement each other, he said.
CECAR has 900 employees in 13 countries, with estimated 1996 revenues of 750 million French francs ($144.5 million), while Faugere & Jutheau has about 500 employees.
Together, the combined operations would have had between 1 billion francs ($192.7 million) and 1.3 billion francs ($250.5 million) in revenues for 1996, making it the largest broker in France, Mr. Carle said.
At least 95% of CECAR revenues derive from retail brokerage. But, even if M&M purchases Minet Group from St. Paul Cos. Inc., it is unlikely that combined retail brokerage revenues, including CECAR, would exceed those of Aon Group Inc. (BI, Jan. 27).
CECAR was not for sale until Aon bought Bain Hogg P.L.C. last October, Mr. Carle said. Bain Hogg's owner, Inchcape P.L.C., owned 41% of CECAR, but there was an option for CECAR shareholders to buy back that stake if Bain Hogg was sold.
However, CECAR decided it did not want to become a partner with Aon. "We explored the idea," said Mr. Carle, who says he has a high regard for Aon Chairman and Chief Executive Officer Patrick Ryan. But Marsh & McLennan is much more stable in London and in continental Europe than Aon, which still must absorb its recent acquisitions, Mr. Carle said. CECAR also discussed the two options with its 10 biggest industrial clients, some of which also are shareholders, and the clients already conducted business with Marsh & McLennan in the United States. "When we asked the industrial groups to choose, they chose Marsh & McLennan," he said.
M&M moved to buy a 41% stake in CECAR early in January and closed that deal as well as its move to buy the rest of the company's shares last week. The $200 million sale price covers the entire purchase.