8-KAcquisitions & DispositionsMaterial AgreementsFinancial Events+2

BROWN & BROWN, INC. 8-K Report, Agreement Terminated (May 27, 2014)

Filed May 27, 2014For Securities:BRO

Summary

This Form 8-K filing by Brown & Brown, Inc. (BRO) on May 27, 2014, announces two significant events that occurred on May 20, 2014. Firstly, the company completed the acquisition of The Wright Insurance Group LLC ("Wright") for an initial cash consideration of $602.5 million, with potential additional consideration of up to $37.5 million tied to future acquisition transactions. Wright is involved in national flood insurance and government-sponsored insurance programs. Secondly, in conjunction with the Wright acquisition, Brown & Brown successfully closed on a new, larger credit facility totaling $800 million in revolving credit and $550 million in term loans, with the potential to increase up to $1.85 billion. A substantial portion of this new facility, $925.0 million, was used to fund the acquisition and simultaneously repay three existing unsecured term loans totaling $230.0 million, thereby consolidating and expanding the company's debt structure.

Key Highlights

  • 1Completion of the acquisition of The Wright Insurance Group LLC for an initial $602.5 million cash payment.
  • 2Potential for up to an additional $37.5 million in cash consideration for the Wright acquisition, contingent on future transactions.
  • 3Secured a new, significantly larger credit facility with an initial aggregate amount of $1.35 billion ($800M revolving + $550M term loan).
  • 4The new credit facility has the flexibility to be increased up to an aggregate of $1.85 billion.
  • 5Borrowed $925.0 million under the new credit facility on May 20, 2014.
  • 6Used proceeds from the new credit facility to fully repay and terminate three existing unsecured term loans totaling $230.0 million.
  • 7The acquisition of Wright positions Brown & Brown in national flood insurance and government-sponsored insurance programs.

Frequently Asked Questions

The initial cash payment for The Wright Insurance Group LLC was $602.5 million. There is also a provision for potential additional cash consideration of up to $37.5 million, dependent on the closing of certain acquisition transactions by Wright or its affiliates before July 15, 2015.

The acquisition was primarily funded by borrowings under a new, larger credit facility. Specifically, $925.0 million was borrowed under this facility, which included $375.0 million under the revolving credit facility and $550.0 million under an unsecured term loan.

The new credit facility represents a substantial increase in the company's borrowing capacity, with an initial aggregate amount of $1.35 billion that can potentially be expanded to $1.85 billion. It also allowed Brown & Brown to consolidate and repay its previous smaller term loans, simplifying its debt structure and providing greater financial flexibility.

The Wright Insurance Group LLC is involved in the national flood insurance program and serves as a service provider for government-sponsored insurance programs, as well as proprietary national and regional insurance programs.