Benfield Greig will become the third biggest reinsurance broker in the world, if its deal to buy US rival EW Blanch Holdings for $179m (£123m) cash goes ahead.

Under the planned merger, Benfield Greig will acquire all of the company's shares for $13.50 (£9.60) each.

The combined company will have pro forma revenues of $410m (£284m) in 2000. It will become the world's largest privately owned reinsurance intermediary with more than 30 offices worldwide and over 1,700 staff.

“The addition of Blanch's leading US market position to Benfield Greig's existing premier international platform will create the only true independent global reinsurance force,” said group chief executive of Benfield Greig, Grahame Chilton.

The London-based company, a leading international reinsurance intermediary and risk advisory group, was formed in 1997. Last year, it saw a pre-tax profits of £37.7m and total revenues of £139.8m.

Blanch provides integrated risk management and distribution services. For the year 2000, it generated revenues of $208m (£144m) and reported pre-tax losses of $3.8m (£2.6m).

Chris Walker, chairman and chief executive officer of Blanch, said its board had conducted an extensive examination before deciding “this transaction best meets our goal of delivering value to our shareholders”.

Last year Benfield Greig hired Rodman Fox to head its expansion in America. At the time, Fox was chief executive of the Dallas-based Blanch.

Shares in Blanch plummeted from $57 (£40) to under $8 (£5.70), following a succession of missed forecasts and the departure of important staff, including chairman Ted Blanch.