We give our tips for the top six most likely broker take-overs this year
Despite the doom and gloom surrounding the UK economy and continuing crisis in the eurozone, broker acquisitions continue. Earlier this month, Capita splashed out £21m on Preston-based broker Fish Administration and CCV snapped up Lyon Insurance Service and Crown Insurance Brokers. But these acquisitions are small fry compared what could be ahead in 2012. Here are six possible targets:
The Midlands-based consolidator is again number one in the likelihood stakes for a buyout. Last year, the market was buzzing with talk that Marsh, which is keen to expand its SME footprint in the UK, was interested. There was also talk that a disagreement over the price of the business had scuppered a deal.
Marsh may well come back to have another look in 2012. Oval is much desired not just because it has captured the SME market, but it has also made serious inroads with the big corporates, an area that is usually the hunting ground for Marsh, Willis and Aon. The net book value of the business (intangible fixed assets) is £123m. Shareholders’ funds is £38m. Net debt is £39.7m.
Word around the Lime Street bars is that it’s a done deal with Hyperion. Windsor’s underlying earnings are around £10m, so that means Hyperion could fork out roughly between £50m and £70m. The Lloyd’s broker has some of the strongest profit margins in the business and a nice international book positioned for growth. It’s ideally suited to Hyperion. Only a dispute over price could see this one fall down.
Founder Joe Henderson has made no secret of the fact that the business is for sale at the right price. Leeds-based Henderson Insurance Brokers could be a target for a firm such as Gallagher, which has shown a real appetite to make its mark in the UK. On last financial reports, profits were just shy of £2m and revenue was £17.4m.
Chairman Glynn Keeling has said he’s in it for the long game and the company is not for sale. That may be so, but it won’t stop admirers having a nibble and testing the shareholders. Autonet is the benchmark for a modern personal lines broker. It has a successful direct site, is on the aggregators and has superior technological abilities, evident by its successful design of a van aggregator for Moneysupermarket. By the end of his year it could have cracked £100 gross written premium.
A bit of an outside bet, but you never know. The synergies with AXA look strong, and it’s no secret that AXA is keen to put more business through its subsidiary company. However, this contrasts with the strategic imperative coming down from Paris for a €1.5bn (£1.2bn) saving in mature markets by 2015. AXA remains a robust international insurer, but if the eurozone crisis spreads to France this year, that could deplete the company’s shareholders’ equity and force its hand. Foreign assets in mature markets, where growth is tough, would surely be on the menu. And that could mean chief executive Stuart Reid, cash rich and well-connected in financial circles, plotting a management buyout of the business. Watch this space.
Cobra is working hard to reduce its debts and cost base. In December it sold Cobra Corporate Solutions for £3.3m. However, there is a possibility that new ownership such as a private equity firm, with fresh capital to inject, could become reality in 2012.