Summary
Brown & Brown, Inc. (BRO) announced on December 15, 2011, a significant acquisition through a merger agreement with Arrowhead General Insurance Agency Superholding Corporation. This transaction involves the acquisition of Arrowhead for a base cash consideration of $395.0 million, with potential adjustments for working capital, debt, and other factors. An additional earn-out payment of up to $5.0 million is contingent on Arrowhead's future performance. This acquisition represents a strategic move by Brown & Brown to expand its operations, particularly within the insurance agency sector. Investors should note the financing strategy, which will be a combination of existing cash and new third-party financing. The closing of the merger is subject to customary conditions, including regulatory approval and required consents, with a termination date set for February 13, 2012.
Key Highlights
- 1Brown & Brown, Inc. entered into a definitive agreement to acquire Arrowhead General Insurance Agency Superholding Corporation for approximately $395.0 million in cash.
- 2The acquisition includes a potential earn-out of up to $5.0 million, payable within 60 days following the third anniversary of the merger's closing, based on Arrowhead's EBITDA performance.
- 3The transaction is structured as a merger, with Brown & Brown's subsidiary, Pacific Merger Corp., merging with and into Arrowhead.
- 4Financing for the acquisition will be a mix of the company's available cash and new third-party financing.
- 5The closing of the merger is contingent upon standard conditions, including the expiration of the Hart-Scott-Rodino waiting period and required consent from certain insurance companies.
- 6Either party has the right to terminate the agreement if the merger is not closed by February 13, 2012.
- 7The company also announced the execution of the agreement via a press release, which is attached as an exhibit.