Arthur J. Gallagher & Co has agreed to acquire the partnership interests of BCHR Holdings, Buck, for a gross consideration of $660m (£543m), subject to regulatory approval.

The acquisition, which is expected to close during the first half of 2023, aims to expand Gallagher’s value proposition within retirement, benefits & HR consulting, administration, and technology, and enhance Gallagher’s offering of professional services.

It will also add ‘bSuite’, a proprietary software platform for benefits administration and employee engagement launched by Buck in 2019, to its offering.

Additionally, Gallagher stated that the acquisition is expected to bring potential cross-selling opportunities across current benefits and clients, combining similar sales culture, and strengthen the employee benefits team.

Under the agreement, Gallagher will acquire the partnership interests of BCHR Holdings, L.P. and its subsidiaries, for a gross consideration of $660m (£543m), or approximately $585m (£482m) net of agreed seller funded expenses and net working capital.

Gallagher explained that the transaction will be funded via free cash flow and short-term borrowings, and is estimated to be approximately 2 per cent accretive to adjusted diluted earnings per share over the twelve-month period ending September 30, 2022, based on an expected expense synergies of around $20m.

Prior to these expenses, Buck's pro forma adjusted trailing twelve-month revenues and earnings before interest, taxes, interest, depreciation, amortisation and coronavirus (EBITDAC) ending September 30, 2022 were approximately $280m and $34m, respectively.

Gallagher confirmed that, including these synergy costs, the purchase multiple is approximately 10.8x of trailing twelve-month September 30, 2022 pro forma adjusted EBITDAC, or 13.1x including expected integration expense of approximately $125m.

Commenting on the acquisition, Gallagher president and CEO, J. Patrick Gallagher, Jr., stated: "Providing a comprehensive suite of products and services that allows employers to attract, engage and retain talent is at the heart of Gallagher Benefit Services' mission and our global Gallagher Better Works value proposition.

"Through the complementary strengths of Buck's defined benefit offerings, investment consulting, digital employee engagement platform and international footprint, the acquisition will broaden, deepen and enhance our client offerings.

"I look forward to welcoming the 2,300 new colleagues joining us as part of this transaction to our growing Gallagher family of professionals."

Adding to this, Buck CEO, Jacker Freker, stated: “I’m delighted to share an exciting and noteworthy milestone for Buck. Buck is thrilled to be bringing our industry-leading capabilities to Gallagher’s best-in-class organization.

"Together, we’ll continue to build upon our excellent market reputations, breadth of talent, commitment to DE&I, and client-first mindset as we serve many of the world’s leading corporations and brands. We could not have achieved this result without the dedication of our exceptional global workforce.”

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