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Jardine Lloyd Thompson Group announces that it has entered into agreements with Heath Lambert Holdings (HLH) to acquire its majority shareholdings and with certain minority shareholders to acquire further shares in HLH’s insurance and reinsurance businesses in Colombia and Peru. In Mexico, JLT, in partnership with the 25% minority shareholder, will assume, through a newly formed company, HLH’s reinsurance interest in Mexico.
In addition JLT will enter into an exclusive representative agreement with HLH’s former subsidiary in Venezuela, which will be acquired, from HLH by its management.
JLT has also entered into put and call option agreements with the active minority shareholders in Colombia, Peru and Mexico for the possible acquisition of their shareholdings over a period to 2011. The companies being acquired and the resulting shareholdings in each are set out in the appendix to this announcement.
Completion of each of the above acquisitions and agreements is conditional upon regulatory approval. The initial consideration payable to HLH and the local minority shareholders on completion is US$47mn in cash.
Further performance related payments may also be made based on the levels of turnover and profit achieved over the three year period following completion.
As indicated above, the agreements also provide for the possible purchase of the interests of the active minority shareholders by way of put and call option arrangements pursuant to which JLT may acquire up to 80% of each such interest between 2007 and 2011. Each residual interest of 20% may also ultimately be acquired by JLT on a similar basis upon the retirement of the relevant shareholder and in certain other circumstances.
The aggregate additional consideration that may be payable in respect of the performance related payments and the possible acquisition consideration for the minority interests is capped at US$96 million in total and will be satisfied by cash or, by mutual agreement, in JLT shares.
The net assets of the companies being acquired are around US$6mn.
The aggregate pro forma brokerage for 2003 attributable to these businesses (including brokerage earned on insurance and reinsurance placements in London arising from Latin America) would have amounted to US$32.6mn. Aggregate pro forma profit before tax for 2003 (including profits on London placements) would have amounted to US$15.2mn. Aggregate pro forma earnings after tax and ongoing minority interests for 2003 (including earnings on London placements) would have amounted to US$7.7mn.
“This transaction adds to JLT’s existing office in Brazil and is an excellent opportunity for JLT to gain a significant position in a large and important market,” claims the firm. “It fits with JLT’s strategy of building its international specialist insurance and reinsurance operations around property, mining, telecommunications, construction, energy, power and aviation where we have particular strengths. There is excellent potential for development of these lines of business in the region and also for referral of business across the JLT Group.”