Willis Group To Pay $1.67 Billion For Hilb Rogal & Hobbs To Double N. America Revenue

NEW YORK_British insurance broker Willis Group Holdings Ltd. is paying $1.67 billion in cash and stock for U.S.-based insurance and risk management firm Hilb Rogal & Hobbs Co. in a move to double its North America revenue.

Willis said late Sunday it will pay $46 per share for Hilb Rogal, 50 percent cash and 50 percent stock, representing a 49 percent premium to Hilb Rogal's closing stock price of $30.89 on Friday.

Based on the Glen Allen, Virginia-based company's 36.4 million common shares outstanding at April 30, the deal is valued at $1.67 billion. Including assumed debt, the deal would be worth $2.1 billion.

Hilb Rogal shares rose $13.32, or 43.2 percent, to $44.21 in morning trading Monday, while Willis Group shares fell 89 cents, or 2.5 percent, to $34.99.

The transaction is expected to close in the fourth quarter, subject to regulatory and Hilb Rogal & Hobbs shareholder approval. Willis said it plans to repurchase most of the shares issued in the deal under its previously approved $1 billion buyback plan.

Willis said the acquisition will add to cash earnings per share immediately and to net income after the second year. The deal more than doubles Willis' North America revenue in employee benefits, and boosts its position in California, Florida, Texas, Illinois, New York, Boston, New Jersey and Philadelphia. Hilb Rogal generated $800 million of revenue in 2007, including $57 million from its London-based international operations.

The combination boosts North American contributions to Willis's overall 2007 revenue to about 45 percent on a pro forma basis, from 30 percent.

The new North American organization will be renamed Willis HRH, and will be led by an Office of the Chairman including Willis North American CEO Don Bailey as chairman and chief executive, HRH President F. Michael Crowley as president and HRH CEO Martin L. Vaughan III, as vice chairman of Willis Group Holdings.