Australian insurance broker AUB Group has signed a cash and stock deal worth A$140m ($94.18m) to fully own MGA Whittles, an insurance broking and strata management company.
Through the deal, AUB Group hopes to scale its core business and improve its ability to use technology and expand its customer base.
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The MGA Whittles Group comprises MGA and the Whittles Group.
MGA is an insurance broker, while Whittles offers complementary services to strata and property management industries.
Under the terms of the deal, the insurance broker will buy the remaining 50.1% stake in MGA and a 100% stake in Whittles.
On completion of the transaction, AUB will pay MGA Whittles Group shareholders $29m in cash and issue 8,764,996 shares at $12.64 per share which totals to a 10.7% stake in AUB.
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By GlobalDataAUB Group CEO Mike Emmett said: “As one of Australia’s largest insurance brokers, the acquisition places MGA at the heart of Austbrokers and enables the next phase of our growth.”
“In addition, the Whittles strata specialty will add a significant complementary capability to AUB.
MGA will continue to operate under the leadership of executive chairman John George.
George said: “My MGA and Whittles team are proud to have built this iconic and profitable business that now boasts 41 branches and over 550 personnel.
“Selling the MGA Whittles Group in exchange for a significant stake in AUB will allow us to fully leverage our long-term partnership to accelerate the growth of the MGA Whittles group for the benefit of all stakeholders.”
Subject to the receipt of regulatory approvals, the transaction is expected to be completed by 31 March of this year.
Acquisition of 40% interest in BizCover:
Concurrently, AUB has also agreed to acquire a 40% stake in online distribution platform BizCover for A$132m ($88.8m) and a working capital adjustment for $3m.
This deal will deliver ‘Austbrokers ExpressCover’, a new quote-to-bind platform exclusive to Austbrokers members which significantly enhance broking services to clients.
BizCover managing director Michael Gottlieb said: “BizCover’s scalable platform and experience in managing high volume SME insurance along with AUB’s significant market share will bring mutual opportunities and benefits. We look forward to working closely with AUB to continue to innovate and simplify the purchasing of SME insurance.”
Founded 11 years ago, BizCover is a small business insurance provider in Australia.
Following the completion of both the transactions, AUB’s proforma is expected to increase by 32.8%.
