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Brown & Brown Inc. has acquired rival Beecher Carlson Holdings Inc. for approximately $336.5 million in net consideration, the brokerage announced Tuesday.
The deal, which is expected to close in July, will bring Daytona Beach, Fla.-based Brown & Brown significant books of middle-market and large-account brokerage business as well as program management and captive management operations.
Brown & Brown purchased Beecher Carlson from Austin Ventures, FSPM and a group of individual employee and nonemployee equityholders.
Atlanta-based Beecher Carlson was the 27th largest broker of U.S. business in 2012, according to Business Insurance's ranking. For 2012, the brokerage reported annual revenues of $105.6 million.
Brown & Brown was the world's seventh-largest insurance brokerage, according to the Business Insurance ranking. The brokerage reported 2012 revenues of $1.2 billion.
J. Powell Brown, CEO and president of Brown & Brown, said the deal offers both expanded operations and industry expertise with the addition of Beecher Carlson's leadership team.
“This transaction brings many exciting opportunities to Brown & Brown. Beecher Carlson enjoys an enviable position in the industry segments in which it operates, especially in the large-account space,” Mr. Brown said in a statement.
Timothy J. Cunningham, managing director of Chicago-based Optis Partners L.L.C., an investment banking and financial consulting firm, said the deal will enable Brown & Brown to broaden it service offerings.
“It certainly is a blockbuster,” Mr. Cunningham said. “It breaks the mold for Brown & Brown and puts them in a different segment of the business. The large-accounts business is somewhere where they really haven’t been before.”
The large-account division will remain in Atlanta and operate as Beecher Carlson under its current leadership, while the middle-market retail offices in Arizona, Mississippi and Oregon will become part of Brown & Brown's retail division.
Steve Denton, president of Beecher Carlson, will become a regional vice president of Brown & Brown and serve as the CEO of Beecher Carlson.
Dan Donovan, Beecher Carlson's CEO, will serve as executive chairman of Beecher Carlson.
“This combination with Brown & Brown is very positive for our clients and employees and we look forward to continuing to build out the Beecher Carlson large-account platform,” Mr. Donovan said in the statement.
In a conference call discussing the deal, Mr. Donovan said the Beecher Carlson accounts he spoke to in the wake of the announcement expressed enthusiasm for the deal.
“The majority of our business is in large accounts, Fortune 2000 companies,” he said. “There are multiple touch points on one account."
The total net consideration for the deal is $336.5 million, with the $360 million in cash offset against adjustments for working capital and the value of net tax operating loss carryforwards, Brown & Brown said in the statement.