Although three ratings agencies are reticent about debt incurred by Willis North America Inc. in its planned acquisition of Hilb Rogal & Hobbs, announced last week, they believe the transaction in the long run will enhance the broker's business profile, especially in North America. The $2.1 billion takeover boosts Willis' revenues by some 30 percent, but the broker remains well behind Aon and Marsh.
Under the terms of the definitive agreement, Willis will acquire all of the outstanding shares of common stock of HRH for $46 a share–50 percent in cash and 50 percent in stock–in a transaction having an equity value of approximately $1.7 billion and an enterprise value (or total purchase price) of about $2.1 billion.
The transaction is expected to close in the fourth quarter of 2008, subject to customary closing conditions, including regulatory and HRH shareholder approval.
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