NU Online News Service, Nov. 19, 10:47 a.m. EST

Willis Group Holdings Limited and family shareholders of French insurance broker Gras Savoye & Cie, said they have an agreement for Astorg Partners to take a third interest in Gras Savoye.

The leveraged transaction announced today with the private equity fund, will reorganize the capital of Gras Savoye and Willis said part of the deal should provide it with $160 million to pay down debt.

Gras Savoye has been an Associate company of Willis brokerage since 1997 when Willis acquired a 33 percent ownership interest. Since then, Willis has gradually increased its shareholding to 48.6 percent of voting rights (46.2 percent of outstanding shares). The family shareholders and management currently own 51.4 percent of the voting shares of Gras Savoye.

"Willis looks forward to building on the strong and valuable relationship we have established with Gras Savoye over the past 12 years, and we remain fully committed to our partnership," said Joe Plumeri, Willis Group chairman and chief executive officer in a statement.

"This new arrangement enhances Willis' financial flexibility, while at the same time, engaging an important new strategic partner in its Gras Savoye investment."

Patrick Lucas, who will continue to head Gras Savoye as chairman and CEO, said the new ownership structure will allow everyone at Gras Savoye "to be connected even more closely with the success of our business."

Mr. Lucas added that, "As we pursue our strategy, we will continue to focus on serving our clients with the highest professional standards and further strengthening our strategic partnership with Willis to deliver the best global insurance and risk management services around the world."

Willis said under the terms of the transaction Astorg Partners will acquire 33.3 percent of the voting rights (31.8 percent of outstanding shares) of a new holding company while Willis and the family shareholders will sell part of their stakes in Gras Savoye to Astorg Partners and roll over their remaining shares into the new holding company, through a combination of equity, convertible debt and seller financing.

Willis, the family shareholders of Gras Savoye, and Astorg will hold equal stakes of 31.8 percent in the new holding company and have equal representation of 33.3 percent of the voting rights on its Board. The remaining 4.5 percent will be held by a large pool of Gras Savoye managers.

This transaction values Willis' existing investment in Gras Savoye at approximately $343 million. Willis will roll over approximately $135 million in equity and convertible debt and lend approximately $48 million to the new holding company at a rate of 6 percent per annum.

Willis said it expects to generate approximately $160 million of tax-free net cash proceeds from the transaction, which it will use to pay down existing debt.

The agreement also gives Willis the option to purchase 100 percent of the capital in the new holding company in 2015, should it choose to do so, with notification in 2014.

An existing put option, which gave family shareholders an option to sell their shares in Gras Savoye to Willis between now and 2011, will be cancelled at the closing of the transaction. The transaction is expected to close in the fourth quarter of 2009, subject to customary approvals and completion of financing.

Christian Couturier, a Partner at Paris-based Astorg Partners, noted that "the leadership of Patrick Lucas, the personal investment of a large number of Gras Savoye managers and employees, the support of Willis, as well as Astorg's track record as a proactive shareholder in family companies, create the conditions for success in the next five years."

Gras Savoye is the largest insurance broker in France and the ninth largest broker globally. The Group has 3,650 employees, 105 offices in 36 countries with a focus on France (with the largest regional network of insurance brokers), Europe, Africa, Middle-East and South East Asia, Willis said.

Special Reports /

Astorg Taking A Stake In Gras Savoye, Willis Says

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