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The Deal: Arthur J. Gallagher Insures Itself With Bollinger Deal

NEW YORK (TheStreet) - Arthur J. Gallagher & Co. (AJG) just picked up additional insurance.

The Itasca, Ill.-based insurance broker said late Monday, Aug. 12, that it agreed to acquire rival Bollinger Inc. from Evercore Capital Partners (EVR), the private equity arm of investment bank Evercore Partners Inc. for about $312 million in cash and stock.

AGC is going to pay about $172 million in cash and $140 million in stock. The company said it would fund the cash portion of the deal through cash on hand and by drawing down from its credit facility. Evercore acquired Short Hill, N.J.-based Bollinger in 2008 from management for about $250 million.

Bollinger provides personal and casualty insurance to midsized businesses, students and amateur sports organizations as well as golf and country clubs. The company has about 500 employees throughout eight offices in the Northeast.

AGC said its latest acquisition, one of its largest by purchase price, will expand its presence in New York and New Jersey and will also allow it to enter the sports insurance arena.

"Because Bollinger's growth strategy, operating structure and sales culture are very similar to Gallagher's, I'm confident that the integration will be extraordinarily successful," said AGC CEO and chairman Patrick Gallagher in a statement.

"We are confident that the combined sales and services resources will provide significant opportunities for our future growth together," added Bollinger CEO and chairman Jack Windolf in a statement, who will stay on with the new combined company at least through the integration process. AGC expects the acquisition to generate up to $40 million in annual Ebitdac (which stands for Ebitda plus a change in acquisition related earnout payments), before integration costs, which it estimates to be up to $3 million per quarter through the end of 2014.

Keefe, Bruyette & Woods Inc. analyst Meyer Shields estimates the purchase price to be valued at around 7.8 times Ebitdac. Meyer added that with the Bollinger acquisition and Brown & Brown Inc. completing its $360 million purchase of Beecher Carlson Holdings Inc. on July 1, insurance broker M&A is poised to pick up.

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