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.
"Two points aren't a trend, but if sub-billion dollar brokers are struggling to stay independent, overall M&A could take off dramatically in our view," Meyer wrote in a Aug. 12 research note. Both AGC and Bollinger have been acquisitive in recent years. Bollinger marks AGC's tenth acquisition this year alone. The majority of AGC's acquisitions are small regional deals where financial terms are usually not disclosed. And after Evercore bought Bollingerin 2008, it made more than a dozen acquisitions, most of them in the Northeast. AGC shares were trading 1.8% higher to $44.52 on Tuesday afternoon with its market capitalization near $5.7 billion. Rob Giammarco and Brad Kleinsteuber of Bank of America Merrill Lynch advised Bollinger. Neither Bollinger nor AGC returned calls on Tuesday. Written by Demitri Diakantonis in New York