Chicago-based insurance broker Hub International Limited said it has completed its $1.7 billion deal to be acquired by private equity firms Apax Partners and Morgan Stanley Principal Investments.

The transaction will pay stockholders $41.50 per share.

Shares of Hub's common shares will cease trading on the New York Stock Exchange and the Toronto Stock Exchange today, and the firm will be delisted.

Apax is a private equity firm with $20 billion under management. Apax has offices in the United States, the United Kingdom, Germany, Sweden, Italy, Spain, Israel, Hong Kong and India.

Morgan Stanley is based in New York and is a financial services firm providing banking, securities, investment management, wealth management and credit services.

This is the second private equity acquisition of a major publicly held insurance brokerage firm this year. On May 4, USI completed its deal to be acquired by Goldman Sachs & Co.'s private equity arm, GS Capital Partners, at $17 a share. That deal was valued at around $1.4 billion.

Kevin M. Stipe, a senior vice president and principal of Reagan Consulting Inc., noted in National Underwriter (June 4, page 42) that there is rampant speculation that one or several other publicly held brokers are looking at acquisition deals by private equity firms.

Two factors are driving acquisition strategies, he pointed out. Private equity firms are flush with cash, according to Mr. Stipe, and they are looking to deploy that capital. Brokers are under pressure from stockholders to increase growth annually at 15 percent but find that difficult in a soft market that is limiting organic growth to 5 percent or less, forcing the turn to acquisition to continue growth.

Bobby Reagan, president and chief executive officer of Reagan Consulting, wrote in National Underwriter (April 9, page 26) that increased regulations and earnings pressures are contributing to the turn to private equity markets.

He also noted there are contributing business advantages making the move from public to private attractive to both parties, including the generation of cash and the fact that the brokerage business is not very capital intensive.

Special Reports /

Hub Completes Acquisition By Apax/Morgan Stanley

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