Manchester broking group to pay £2.7m for niche broker

CBG Group, the Manchester based insurance broker, has acquired Marcus Hearn & Co, the trading subsidiary of the Marcus Hearn Group of Companies.

CBG has agreed to pay up to £2.71m in cash and shares for Marcus Hearn.

The acquisition will expand the geographical footprint and extend new business opportunities, CBG said.

Marcus Hearn is a provider of specialist niche insurance products and general insurance broking services, based in Shoreditch, London.

In addition to its high profile twins and multiple births insurance scheme Marcus Hearn is known for its range of branded travel products and other schemes, including “Fly-Sure”, “Scheduled Airline Failure (SAFI)” and more recently “Cover All”. It also distributes commercial and general insurance products, both directly and via a network of approximately 450 brokers.

Marcus Hearn, in its audited accounts for the year ended 30 September 2006, reported turnover of £1,326,950 and profit before tax of £69,197. Net assets at 30 September 2006 were £796,225.

The business will continue to trade as Marcus Hearn, as a trading style of CBG Insurance Brokers (London), and will continue to operate from its existing premises on Shoreditch High Street.

The existing directors of Marcus Hearn, with the exception of Michael Green who has retired as chairman, will continue in their existing roles. The Directors believe that significant synergies will be generated by the addition of Marcus Hearn, both in terms of further development of the schemes and facilities, and also through the cross selling opportunities available from the wider group service offering.

Martin Lewis, technical director of CBG Group plc, will be responsible for Marcus Hearn operationally.

The total consideration payable is £2,710,000 comprising initial consideration of £1,885,000 and deferred consideration of £825,000. In addition, a payment in cash will be made amounting to the value of net assets as at completion, expected to be approximately £800,000 largely represented by cash balances.

The initial consideration of £1,885,000, satisfied on completion, comprises cash of £1,825,000 and the issue of 32,520 new ordinary shares (locked in for a period of 24 months after completion) in CBG at 184.5p per share.

The deferred consideration of £825,000 is payable in two tranches of £412,500 in December 2008 and December 2009, subject to Marcus Hearn achieving certain turnover levels in the two years following completion.

Following the acquisition of Marcus Hearn, Robin Slinger, currently CBG chief executive, steps up to deputy chairman and will support CBG’s corporate activities and special projects.

Mike Askew, currently deputy chief executive, becomes group managing director and will be responsible for the group’s national day to day operations.

Martyn Hughes, who has been with the company since its inception and is currently company secretary and a member of the acquisition team responsible for due diligence and integration, joins the CBG board as executive director.

Commenting on the acquisition and board changes, chairman Laurie Turnbull said: "The acquisition of Marcus Hearn is significant for CBG as it extends the geographic footprint outside the North West. CBG now has offices both in Manchester and London as well as five regional centres and employs approximately 150 people. The group is now well placed to continue its expansion plan and we look forward to the next phase of development in the North and the South."

Application has been made for the 32,520 new ordinary shares forming part of the initial consideration to be admitted to trading on AIM and it is anticipated that dealings will commence in the ordinary shares on 12 October 2007.