Arthur J. Gallagher Strengthens Portfolio With MMT Buyout

Arthur J. Gallagher & Co. (NYSE:AJG) has closed the buyout of McConnell, Manit & Trout Insurance Services, LLC (MMT). The details of the transaction were not made public.

Founded in 2013, MMT is a San Luis Obispo, CA-based full-service property and casualty broker. The brokerage, with offices in Fresno, CA, Reno, NV and Boise, ID, caters to companies operating in building materials, energy, waste, construction and transportation industries.

We believe MMT is a strategic fit for Arthur J. Gallagher. This is because the buyout will provide the acquirer significant growth opportunities and is likely to boost its expertise in several key industries.

This latest transaction marks Arthur J. Gallagher’s eighth buyout in the first quarter of 2020. A strong capital position supported by sustained solid operational performance should continue to back its inorganic efforts.

Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations. A number of strategic acquisitions have boosted its capabilities and diversified operations. Its inorganic pipeline remains strong with revenues of about $250 million, associated with 50 term sheets either agreed upon or being prepared. In 2019, the company closed 49 mergers with more than $468 million of annualized revenues. These buyouts provide the company with incremental capabilities and services to assist clients across Australia, the UK, Europe and the United States.

Shares of this Zacks Rank #2 (Buy) insurance broker have gained 0.4% in the past year against the industry’s decline of 2.2%.

Other Acquisitions in the Same Space

Recently, there have been a number of acquisitions in the insurance industry, given the significant capital available. For example, Brown & Brown, Inc.’s (NYSE:BRO) subsidiary, Hull & Company, LLC closed the buyout of all the assets of The Colonial Group, Inc., Affordable Home Services, Inc., and Mobilhome Insurance Service, Inc. (collectively, The Colonial Group). The acquisition is expected to assist customers, employees and carriers of both the organizations and will provide them with enhanced growth opportunities.

Also, Aon plc (NYSE:AON) entered into an agreement with Willis Towers Watson Public Limited Company (NASDAQ:WLTW) to combine in an all-stock deal, which is expected to cater to unmet client requirements and fight the evolving insurance industry threats. This acquisition is the insurance sector's largest deal, combining the world’s second and the largest insurance brokers.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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