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LONDON-David Herro, the Chicago-based fund manager who led the shareholder drive to oust the management of British advertising agency Saatchi & Saatchi, says he is not planning any similarly aggressive moves at Sedgwick Group P.L.C.
Last week, a fund managed by Mr. Herro, Oakmark International, said it had raised its stake in Sedgwick to 3.1%, just over the 3% level in which shareholders must disclose their interests under British securities laws.
The move immediately started rumors in London that Mr. Herro would use that position to try and force a merger between Sedgwick and rival British broker Willis Corroon P.L.C.
However, Mr. Herro said the increased shareholding just reflects his view that Sedgwick is an undervalued stock and a good investment.
"It is a well-run and undervalued company," he said.
The speculation that Mr. Herro would take a more aggressive role stems from the position he took as a shareholder of the former Saatchi & Saatchi. He led a shareholder revolt that resulted in the founders, Maurice and Charles Saatchi, leaving the agency.
"That was the one occasion where we became more aggressive, normally we act as a long-term passive shareholder," Mr. Herro said.
And that is the position Oakmark is taking with its Sedgwick investment, he added, noting that he does not have any shareholding in Willis Corroon.
The increase in Oakmark's holding is not surprising to Sedgwick, said a company spokeswoman. "He came to see us over a year ago and has been buying our stock on a steady basis since then."
But stock analysts thought it notable that Mr. Herro bought enough stock to push him over the disclosure mark, and speculated he might push other stockholders in Sedgwick and Willis Corroon Group P.L.C. to merge the two companies against management wishes.
One shareholder that would need convincing is fund manager PDFM Ltd., which owns 26.08% of Sedgwick and 22% of Willis Corroon.
Some analysts have said that in light of acquisitions made by brokers Marsh & McLennan Cos. Inc. and Aon Group Inc., both Sedgwick and Willis would have to consider a merger to remain competitive (BI, March 17).
While Sedgwick has said it would be open to a merger with the right partner, Willis management has stated unequivocally that it intends to remain independent.
Sources at Willis said they think a merger would be "a commercial disaster."