Automatic Shelf Registration Statement (Form S-3ASR)
Table of Contents
As filed with the
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(Exact name of registrant as specified in its charter)
6411 | 36-2151613 | |||
(State or other jurisdiction of incorporation or organization) |
( Classification Code Number) |
(I.R.S. Employer Identification No.) |
60008-4050
(630) 773-3800
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Vice President, General Counsel and Secretary
(630) 773-3800
(
COPIES TO:
(212) 351-4034 |
Jorge U. Juantorena, Esq. (212) 225-2000 |
Approximate date of commencement of proposed sale of the securities to the public: From time to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☒
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. ☐
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The information in this preliminary prospectus is not complete and may be changed. This preliminary prospectus is part of an effective registration statement filed with the
SUBJECT TO COMPLETION, DATED
PRELIMINARY PROSPECTUS
$
Common Stock
We are offering $ in shares of our common stock,
Our common stock is listed on the
Per share | Total | |||||||
Public offering price |
$ | $ | ||||||
Underwriting discounts and commissions |
$ | $ | ||||||
Proceeds, before expenses, to us |
$ | $ |
We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to an additional $ in shares of common stock from us. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be $ and total proceeds, before expenses, to us will be $ .
Investing in our common stock involves risks. See "Risk Factors" beginning on page 20 of this prospectus. You should also consider the risk factors described in the documents incorporated by reference into this prospectus, including the risk factors described in our Annual Report on Form 10-K for the fiscal year ended
Neither the
The underwriters expect to deliver the shares of our common stock to purchasers on December , 2024.
Joint Book-Running Managers
Morgan Stanley |
The date of this prospectus is December , 2024.
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TABLE OF CONTENTS
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION |
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MATERIAL |
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You should rely only on the information contained in or incorporated by reference in this prospectus or that is contained in any free writing prospectus prepared by us or on our behalf. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We and the underwriters take no responsibility for, and can provide no assurances as to the reliability of, any other information that others may give you. We are not, and the underwriters are not, making an offer to sell the common stock in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and in the documents incorporated by reference herein or that is contained in any free writing prospectus issued by us is accurate only as of their respective dates. Our business, financial condition, results of operation and prospects may have changed since those dates.
PROHIBITION OF SALES TOEEARETAIL INVESTORS-The shares of common stock are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Article 2(e) of Regulation (EU) 2017/1129 (as amended, the "Prospectus Regulation"). Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling packaged retail and insurance based investment products or otherwise making them available to retail investors in the EEA has been prepared and, therefore, offering or selling the shares of common stock or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
NOTICE TO PROSPECTIVE INVESTORS IN THE EEA-In the EEA, this prospectus and any other material in relation to the shares of common stock are only being distributed to, and are only directed at, "non-retail investors" (being persons who are not "retail investors" as defined in the section above titled "Prohibition of sales to EEA retail investors") and any investment or investment activity to which this prospectus relates is available only to, and will be engaged in only with, non-retail investors. This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by any recipients to any other persons in the EEA. Any person in the EEA who is a "retail investor" should not act or rely on this prospectus or its contents.
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PROHIBITION OF SALES TO
NOTICE TO PROSPECTIVE INVESTORS IN THE
This prospectus has not been approved for the purposes of Section 21 of the FSMA by a person authorized under the FSMA. This prospectus is being distributed and communicated to persons in the
References in the sections above titled "Prohibition of sales to
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ABOUT THIS PROSPECTUS
You should rely only on information contained in or incorporated by reference in this prospectus. We have not authorized anyone to give you any information or make any representation that is different from, or in addition to, that contained in this prospectus or in any of the materials that we have incorporated by reference into this document. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the common stock offered by this document are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this document does not extend to you. The information contained in this prospectus (including the information contained in any document incorporated by reference in this prospectus) speaks only as of the date of each such document, unless the information specifically indicates that another date applies.
We include cross-references in this prospectus to captions in these materials where you can find additional related discussions. The table of contents in this prospectus provides the pages on which these captions are located.
Unless otherwise indicated or the context otherwise requires, references in this prospectus to the "Company," "Gallagher," "we," "our" and "us" refer to both
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CAUTIONARY STATEMENTS REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference herein contain certain statements related to future results, or state our intentions, beliefs and expectations or predictions for the future, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations or forecasts of future events and use words such as "anticipate," "believe," "estimate," "expect," "contemplate," "forecast," "project," "intend," "plan," "potential" and other similar terms, and future or conditional tense verbs like "could," "may," "might," "see," "should," "will" and "would." You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. For example, we may use forward-looking statements when addressing topics such as: statements regarding expected benefits of the proposed Transaction (as defined in "Summary-Recent Developments"); the benefits of the proposed Transaction, including future financial and operating results and synergies; the expected revenue, earnings per share ("EPS"), net earnings before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables ("EBITDAC") and credit rating impacts of the proposed Transaction; the size and status of the combined organization within various jurisdictions; required regulatory approvals; expected timing of completion of the proposed Transaction; expected duration and cost of integration, and the anticipated financing of the proposed Transaction; the plans, objectives, expectations and intentions with respect to the Acquired Entity; the impact of general economic conditions, including inflation, interest rates and market uncertainty; the effects of geopolitical volatility, including repercussions from the wars in
Potential factors that could impact results include:
• |
Risks related to the integration of the operations, businesses and assets acquired in the proposed Transaction into the Company; |
• |
The possibility that the proposed Transaction is not completed when expected or at all because required regulatory approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; |
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The risk that our free cash generation is insufficient, or the financing required to fund the proposed Transaction is not obtained on the terms anticipated or at all; |
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Potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed Transaction; |
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The possibility that the anticipated benefits of the proposed Transaction, including cost savings and expected synergies, are not realized when expected or at all, including as a result of the impact of, or issues arising from, the integration of the acquired operations; |
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Conditions imposed in order to obtain required regulatory approvals for the proposed Transaction; |
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Uncertainties in the global economy and equity and credit markets and their potential impact on the Company's ability to finance the proposed Transaction on acceptable terms, at favorable pricing, in a timely manner, or at all; |
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The possibility that the proposed Transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; |
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Diversion of management's attention from ongoing business operations and opportunities; |
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The inability to retain certain key employees of the operations acquired in the proposed Transaction or the Company; |
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Risks associated with increased leverage from the proposed Transaction; |
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Competitive and market responses to the proposed Transaction; |
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Uncertainties as to the timing of the consummation of the proposed Transaction and the ability of each party to consummate the proposed Transaction; |
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That financial information subsequently presented for the business acquired in the proposed Transaction in our subsequent public filings may be different from that presented herein; |
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Global economic and geopolitical events, such as fluctuations in interest and inflation rates; a recession or economic downturn; failures of financial institutions and other counterparties; a potential |
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Economic conditions that result in financial difficulties for underwriting enterprises or lead to reduced risk-taking capital capacity, for example, as a result of large payouts related to extreme weather events, or to the failure of such enterprises, including the increased risk of errors and omissions (which we refer to as E&O) claims against us; |
• |
Risks that could negatively affect the success of our acquisition strategy, including the impact of economic uncertainty on our ability to source, review and price acquisitions; continuing consolidation in our industry and interest in acquiring insurance brokers on the part of private equity firms and newly public insurance brokers, which makes it more difficult to identify targets and in some cases makes them more expensive; inaccurate assumptions and failure to realize expected benefits; the risk that we may not receive timely regulatory approval of pending transactions; closing risks; execution risks; integration risks; poor cultural fit; the risk of post-acquisition deterioration leading to intangible asset impairment charges; and the risk we could incur or assume unanticipated liabilities such as cybersecurity issues or those relating to violations of anti-corruption and sanctions laws; |
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Risks related to Willis Re, Buck, |
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Damage to our reputation, including as a result of sustainability matters, and the potential for the Internet and social media to magnify the effects of such reputational issues; |
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Failure to meet our sustainability-related aspirations, goals and initiatives or to comply with increasingly complex climate-related regulations including increased risks related to "greenwashing"; |
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Emerging risks relating to the use of artificial intelligence ("AI") in our business operations, including regulatory, data privacy and cybersecurity risks; |
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Failure to apply technology, data analytics and AI effectively in driving value for our clients through technology-based solutions, or failure to gain internal efficiencies and effective internal controls through the application of technology and related tools; |
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Risks associated with the use of AI in our business operations, including regulatory, data privacy, cybersecurity, E&O and competition risks; |
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Failure to attract and retain experienced and qualified talent, including our senior management team, or adequately plan and execute for the succession of such leaders; increased costs resulting from increased compensation and benefits packages as a result of a tighter labor market, and negative effects from restrictions on non-compete agreements at the state level; |
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A disaster or other significant disruption to business continuity for our own operations or those of third parties on which we rely, including cybersecurity incidents; natural disasters; political violence and unrest in the |
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Sustained increases in the cost of employee benefits and compensation expenses; |
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Risks arising from our international operations and changes in international conditions, including the risks posed by political and economic uncertainty in certain countries (including repercussions from the wars in |
• |
Risks related to changes in |
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Competitive pressures, including as a result of innovation, in each of our businesses; |
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Volatility or declines in premiums or other adverse trends in the insurance industry; |
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The higher level of variability inherent in contingent and supplemental revenues versus standard commission revenues; |
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Risks particular to our benefit consulting operations, including risks related to the acquisition of Buck; |
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Risks particular to our third-party claims administrations operations, including risks related to the availability of RISX-FACS®, our proprietary risk management information system, wage inflation, staffing shortages, any slowing of the trend toward outsourcing claims administration and the concentration of large amounts of revenue with certain clients; |
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Climate risks, including the risk of a systemic economic crisis and disruptions to our business caused by the transition to a low-carbon economy; |
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Cyber-attacks or other cybersecurity incidents and the heightened risk of such attacks as a result of the wars in |
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Unfavorable determinations related to contingencies and legal proceedings; |
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Violations or alleged violations of the |
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Failure to comply with regulatory requirements, including those related to governance and control requirements in particular jurisdictions, international sanctions, including new sanctions laws as a result of the wars in |
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Changes to our financial presentation from new accounting estimates and assumptions; |
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Intellectual property risks; |
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Risks related to our legacy clean energy investments, including intellectual property claims, environmental and product liability claims, environmental compliance costs and the risk of disallowance by the |
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The risk that our outstanding debt adversely affects our financial flexibility and restrictions and limitations in the agreements and instruments governing our debt; |
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The risk of credit rating downgrades; |
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The risk that we may not be able to receive dividends or other distributions from our subsidiaries, including the effects of significant changes in foreign exchange rates; |
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The risk of share ownership dilution when we issue common stock; and |
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Volatility of the price of our common stock. |
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions, including the risk factors referred to above. Our future performance and actual results or outcomes may differ materially from those expressed in forward-looking statements. Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of, and are based on information available to us on, the date of the applicable document. Many of the factors that will determine these results are beyond our ability to control or predict. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Forward-looking statements speak only as of the date that they are made, and we do not undertake any obligation to update any such statements or release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect new information, future or unexpected events or otherwise, except as required by applicable law or regulation. In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future.
A detailed discussion of the factors that could cause actual results to differ materially from our published expectations is contained under the heading "Risk Factors" below and in our filings with the
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SUMMARY
The following summary should be read together with the information contained in other parts of this prospectus and the information incorporated by reference herein. This summary highlights selected information from this prospectus regarding the offering of the shares of common stock. You should read this prospectus, including the documents we incorporate by reference, carefully to understand fully the terms of the offering as well as other considerations that are important to you in making a decision to invest in the shares of our common stock. You should pay special attention to the "Risk Factors" section of this prospectus, and the "Risk Factors" section in our Annual Report on Form 10-K for the fiscal year ended
Our Company
We are engaged in providing insurance brokerage, reinsurance brokerage, consulting services, and third-party property/casualty claims settlement and administration services to entities and individuals around the world. In the nine-month period ended
Recent Developments
Transaction
On
The Purchase Agreement contains representations, warranties and covenants related to the Transaction that are customary for a transaction of this nature, and the completion of the Transaction is dependent upon receipt of
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regulatory clearances in the
The Purchase Agreement has been filed as an exhibit to the Company's Current Report on Form 8-K, filed on
We expect to use the net proceeds of this offering, available cash and available borrowings under our credit agreement, dated
This offering is not conditioned on the closing of the Transaction or the concurrent notes offering, and there can be no assurance that either the concurrent notes offering or the Transaction will be completed. See "Risk Factors-There can be no assurance that the Transaction will be completed or that we will realize the expected benefits of the Transaction."
Corporate Information
Our principal executive offices are located at
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THE OFFERING
The following summary contains basic information about this offering. This summary is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus. For a more complete description of the shares of common stock, see "Description of Capital Stock" in this prospectus.
Issuer |
Common stock offered |
$ in shares. We have also granted the underwriters a 30-day option to purchase up to an additional $ in shares. |
Common stock to be outstanding immediately following this offering |
shares (or shares if the underwriters exercise their option to purchase additional shares in full) (based on shares outstanding on |
Use of proceeds |
We estimate that the net proceeds from the sale of the shares of our common stock will be approximately $ (or approximately $ if the underwriters exercise their option to purchase additional shares in full) after deducting underwriting discounts and commissions and offering expenses. |
We expect to use the net proceeds of this offering to fund a portion of the cash consideration payable in connection with the Transaction and, to the extent that any proceeds remain thereafter, or if the Transaction is not completed, for general corporate purposes including other acquisitions. In addition to the net proceeds from this offering, we expect to use available cash, available borrowings under our Revolving Credit Facility or other borrowings to complete the Transaction. Subject to market conditions and other factors, we expect to raise additional amounts to fund the purchase price for the Transaction in the concurrent notes offering. |
This offering is not conditioned on the closing of the Transaction and there can be no assurance that the Transaction will be completed. The shares offered hereby will remain outstanding whether or not the Transaction is completed. See "Use of Proceeds." |
Trading symbol for our common stock |
Our common stock is listed on the |
|
For a discussion of certain |
Risk factors |
You should carefully consider the information set forth in the section of this prospectus entitled "Risk Factors" as well as the other information included in or incorporated by reference into this prospectus, including the risk factors described in our Annual Report on Form 10-K for the fiscal year ended |
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Concurrent notes offering |
Subject to market conditions and other factors, we expect to raise additional amounts to fund the purchase price for the Transaction in a public offering of our senior notes. |
This offering is not conditioned on the closing of the Transaction or the concurrent notes offering, and the closing of the concurrent notes offering is not conditioned on the closing of this offering or the Transaction. There can be no assurance that the concurrent notes offering or the Transaction will be completed. See "Risk Factors-There can be no assurance that the Transaction will be completed or that we will realize the expected benefits of the Transaction." |
Except as otherwise indicated, all information in this prospectus:
• |
assumes that the underwriters will not exercise their option to purchase up to an additional $ in shares from the Company; |
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excludes 5,581,023 shares representing the maximum number of shares remaining for issuance pursuant to our Registration Statements on Form S-4 (File Nos. 333-214617 and 333-268400) in connection with acquisitions; |
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excludes 7,516,558 shares issuable upon the exercise of options outstanding as of |
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excludes 4,785,770 shares available for purchase under our Employee Stock Purchase Plan as of |
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial information set forth below has been prepared in accordance with Article 11 of Regulation S-X as amended and should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with:
• |
Audited consolidated financial statements and accompanying notes of the Company as of and for the fiscal years ended |
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Unaudited consolidated financial statements and accompanying notes of the Company as of |
• |
Audited consolidated financial statements and accompanying notes of the Acquired Entity as of and for the year ended |
The unaudited pro forma condensed combined financial information is based on the historical consolidated financial statements of the Company and the historical consolidated financial statements of the Acquired Entity, as adjusted to give effect to the Transaction, this offering and the concurrent notes offering (collectively, the "Transactions" and, when referring only to this offering and the concurrent notes offering, the "Acquisition Financing"). The unaudited pro forma condensed combined balance sheet as of
The following unaudited pro forma condensed combined financial information provides for pro forma adjustments giving effect to the Transactions.
The unaudited pro forma condensed combined financial information has been prepared by us using the acquisition method of accounting in accordance with
Provisional estimates of fair value of the Acquired Entity's assets acquired and liabilities assumed will be subsequently reviewed and finalized within the first year of operations subsequent to the acquisition date to determine the necessity for adjustments. Fair value adjustments, if any, are most common to the values established for amortizable intangible assets, including expiration lists, trade name, and assembled workforce, with the offset to goodwill, net of any income tax effect. Provisional estimates of fair value were used by us to
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disclose the acquisition of the Acquired Entity as of the acquisition date. We are using independent third-party valuation specialists to assist us in determining the fair value of assets acquired and liabilities assumed for the Transaction. As of this filing, the specialists have not completed their analysis and thus these fair value estimates are provisional. These provisional fair value estimates will be subsequently reviewed and adjusted based on the results of this valuation.
As a result of the foregoing, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. Differences between these preliminary estimates and the final acquisition accounting may arise, and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial information and the combined Company's future results of operations and financial position. See "Risk Factors-The unaudited pro forma condensed combined financial information reflecting the Transaction included in this prospectus is based on assumptions and is subject to change based on various factors" for further information.
The unaudited pro forma condensed combined financial information does not reflect any expected cost savings, operating synergies or revenue enhancements that the combined entity may achieve as a result of the acquisition or the costs necessary to achieve any such cost savings, operating synergies or revenue enhancements.
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of
(in millions)
Arthur J. As Reported |
Acquired Entity As Adjusted (Note 2) |
Acquisition Financing Adjustments |
Note 3 | Transaction Accounting Adjustments |
Note 4 | Pro Forma Combined |
||||||||||||||||||
Cash and cash equivalents |
$ | 2,022.4 | $ | 376.9 | $ | 13,215.4 | (a) (b) | $ | (13,450.0 | ) | (b) | $ | 2,164.7 | |||||||||||
Fiduciary assets |
30,836.3 | 703.9 | - | - | 31,540.2 | |||||||||||||||||||
Accounts receivable, net |
3,988.8 | 654.5 | - | - | 4,643.3 | |||||||||||||||||||
Other current assets |
435.2 | 142.9 | - | - | 578.1 | |||||||||||||||||||
Total current assets |
37,282.7 | 1,878.2 | 13,215.4 | (13,450.0 | ) | 38,926.3 | ||||||||||||||||||
Fixed assets - net |
660.1 | 167.0 | - | - | 827.1 | |||||||||||||||||||
Deferred income taxes |
1,016.8 | - | - | (1,016.8 | ) | (i) | - | |||||||||||||||||
Other noncurrent assets |
1,361.8 | 130.1 | - | (71.6 | ) | (c) | 1,420.3 | |||||||||||||||||
Right-of-use assets |
374.7 | 155.4 | - | - | 530.1 | |||||||||||||||||||
|
12,193.4 | 5,848.4 | - | 2,474.0 | (a) (b)
(c) (d) |
20,515.8 | ||||||||||||||||||
Amortizable intangible assets - net |
4,353.2 | 3,042.4 | - | 2,681.7 | (d) | 10,077.3 | ||||||||||||||||||
Total assets |
$ | 57,242.7 | $ | 11,221.5 | $ | 13,215.4 | $ | (9,382.7 | ) | $ | 72,296.9 | |||||||||||||
Fiduciary liabilities |
$ | 30,836.3 | $ | 703.9 | $ | - | $ | - | $ | 31,540.2 | ||||||||||||||
Accrued compensation and other current liabilities |
3,222.5 | 703.0 | - | 10.0 | (f) | 3,935.5 | ||||||||||||||||||
Deferred revenue - current |
680.8 | 69.8 | - | - | 750.6 | |||||||||||||||||||
Premium financing debt |
259.9 | - | - | - | 259.9 | |||||||||||||||||||
Corporate related borrowings - current |
200.0 | 33.3 | - | (33.3 | ) | (a) | 200.0 | |||||||||||||||||
Total current liabilities |
35,199.5 | 1,510.0 | - | (23.3 | ) | 36,686.2 | ||||||||||||||||||
Corporate related borrowings - noncurrent |
7,791.9 | 6,484.7 | 4,907.2 | (b) | (6,484.7 | ) | (a) | 12,699.1 | ||||||||||||||||
Deferred revenue - noncurrent |
65.3 | 43.1 | - | - | 108.4 | |||||||||||||||||||
Lease liabilities - noncurrent |
326.2 | 130.6 | - | - | 456.8 | |||||||||||||||||||
Deferred tax liabilities - noncurrent |
96.0 | 396.1 | - | (319.6 | ) | (i) | 172.5 | |||||||||||||||||
Other noncurrent liabilities |
1,554.2 | 111.9 | - | - | 1,666.1 | |||||||||||||||||||
Total liabilities |
45,033.1 | 8,676.4 | 4,907.2 | (6,827.6 | ) | 51,789.1 | ||||||||||||||||||
Mezzanine equity |
||||||||||||||||||||||||
Redeemable Series A Preferred Stock |
- | 297.5 | - | (297.5 | ) | (a) | - | |||||||||||||||||
Stockholders' equity |
||||||||||||||||||||||||
Common stock |
219.4 | - | 31.0 | (a) | - | 250.4 | ||||||||||||||||||
Capital in excess of par value |
7,697.4 | 2,384.3 | 8,277.2 | (a) | (2,384.3 | ) | (a) | 15,974.6 | ||||||||||||||||
Retained earnings |
4,860.6 | (130.3 | ) | - | 120.3 | (a) (f) | 4,850.6 | |||||||||||||||||
Accumulated other comprehensive loss |
(593.4 | ) | (6.4 | ) | - | 6.4 | (a) | (593.4 | ) | |||||||||||||||
Stockholders' equity attributable to controlling interests |
12,184.0 | 2,545.1 | 8,308.2 | (2,555.1 | ) | 20,482.2 | ||||||||||||||||||
Stockholders' equity attributable to noncontrolling interests |
25.6 | - | - | - | 25.6 | |||||||||||||||||||
Total stockholders' equity |
12,209.6 | 2,545.1 | 8,308.2 | (2,555.1 | ) | 20,507.8 | ||||||||||||||||||
Total liabilities, mezzanine equity, and stockholders' equity |
$ | 57,242.7 | $ | 11,221.5 | $ | 13,215.4 | $ | (9,832.7 | ) | $ | 72,296.9 | |||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial information
7
Table of Contents
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
For the Nine Months Ended
(in millions, except per share data)
Arthur J. As Reported |
Acquired Entity As Adjusted (Note 2) |
Acquisition Financing Adjustments |
Note 3 | Transaction Accounting Adjustments |
Note 4 | Pro Forma Combined |
||||||||||||||||||||||
Commissions |
$ | 5,193.2 | $ | 1,704.2 | $ | - | $ | - | $ | 6,897.4 | ||||||||||||||||||
Fees |
2,723.3 | 330.3 | - | - | 3,053.6 | |||||||||||||||||||||||
Supplemental revenues |
261.7 | - | - | - | 261.7 | |||||||||||||||||||||||
Contingent revenues |
215.1 | 182.4 | - | - | 397.5 | |||||||||||||||||||||||
Interest income, premium finance revenues and other income |
327.3 | 18.5 | - | - | 345.8 | |||||||||||||||||||||||
Revenues before reimbursements |
8,720.6 | 2,235.4 | - | - | 10,956.0 | |||||||||||||||||||||||
Reimbursements |
118.3 | - | - | - | 118.3 | |||||||||||||||||||||||
Total revenues |
8,838.9 | 2,235.4 | - | - | 11,074.3 | |||||||||||||||||||||||
Compensation |
4,967.9 | 1,189.4 | - | 10.1 | (c) | 6,167.4 | ||||||||||||||||||||||
Operating |
1,315.0 | 349.8 | - | - | 1,664.8 | |||||||||||||||||||||||
Reimbursements |
118.3 | - | - | - | 118.3 | |||||||||||||||||||||||
Interest |
279.4 | 439.5 | 204.8 | (c) | (439.5 | ) | (h) | 484.2 | ||||||||||||||||||||
Depreciation |
131.5 | 28.4 | - | - | 159.9 | |||||||||||||||||||||||
Amortization |
497.8 | 248.2 | - | 36.8 | (e) (h) | 782.8 | ||||||||||||||||||||||
Loss on extinguishment of debt |
- | 3.4 | - | - | 3.4 | |||||||||||||||||||||||
Change in estimated acquisition earnout payables |
(12.6 | ) | 68.6 | - | - | 56.0 | ||||||||||||||||||||||
Total expenses |
7,297.3 | 2,327.3 | 204.8 | (392.6 | ) | 9,436.8 | ||||||||||||||||||||||
Earnings before income taxes |
1,541.6 | (91.9 | ) | (204.8 | ) | 392.6 | 1,637.5 | |||||||||||||||||||||
Provision (benefit) for income taxes |
329.4 | (17.4 | ) | (53.2 | ) | (d) | 102.1 | (g) | 360.9 | |||||||||||||||||||
Net earnings (loss) |
1,212.2 | (74.5 | ) | (151.6 | ) | 290.5 | 1,276.6 | |||||||||||||||||||||
Net earnings attributable to noncontrolling interests |
7.8 | - | - | - | 7.8 | |||||||||||||||||||||||
Net earnings attributable to controlling interests |
$ | 1,204.4 | $ | (74.5 | ) | $ | (151.6 | ) | $ | 290.5 | $ | 1,268.8 | ||||||||||||||||
Basic net earnings per share (5) |
$ | 5.51 | $ | 5.09 | ||||||||||||||||||||||||
Diluted net earnings per share (5) |
$ | 5.40 | $ | 5.00 |
See accompanying notes to unaudited pro forma condensed combined financial information
8
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
For the Twelve Months Ended
(in millions, except per share data)
Arthur J. As Reported |
Acquired Entity As Adjusted (Note 2) |
Acquisition Financing Adjustments |
Note 3 | Transaction Accounting Adjustments |
Note 4 | Pro Forma Combined |
||||||||||||||||||||||
Commissions |
$ | 5,865.0 | $ | 1,962.2 | $ | - | $ | - | $ | 7,827.2 | ||||||||||||||||||
Fees |
3,144.7 | 392.6 | - | - | 3,537.3 | |||||||||||||||||||||||
Supplemental revenues |
314.2 | - | - | - | 314.2 | |||||||||||||||||||||||
Contingent revenues |
235.3 | 198.9 | - | - | 434.2 | |||||||||||||||||||||||
Interest income, premium finance revenues and other income |
367.3 | 34.5 | - | - | 401.8 | |||||||||||||||||||||||
Revenues before reimbursements |
9,926.5 | 2,588.2 | - | - | 12,514.7 | |||||||||||||||||||||||
Reimbursements |
145.4 | - | - | - | 145.4 | |||||||||||||||||||||||
Total revenues |
10,071.9 | 2,588.2 | - | - | 12,660.1 | |||||||||||||||||||||||
Compensation |
5,681.2 | 1,389.3 | - | 11.8 | (c) | 7,082.3 | ||||||||||||||||||||||
Operating |
1,689.7 | 407.8 | - | 10.0 | (f) | 2,107.5 | ||||||||||||||||||||||
Reimbursements |
145.4 | - | - | - | 145.4 | |||||||||||||||||||||||
Interest |
296.7 | 492.9 | 273.0 | (c) | (492.9 | ) | (h) | 569.7 | ||||||||||||||||||||
Depreciation |
165.2 | 28.2 | - | - | 193.4 | |||||||||||||||||||||||
Amortization |
531.3 | 248.0 | - | 156.0 | (e) (h) | 935.3 | ||||||||||||||||||||||
Loss on extinguishment of debt |
- | 3.2 | - | - | 3.2 | |||||||||||||||||||||||
Change in estimated acquisition earnout payables |
377.3 | 85.9 | - | - | 463.2 | |||||||||||||||||||||||
Total expenses |
8,886.8 | 2,655.3 | 273.0 | (315.1 | ) | 11,500.0 | ||||||||||||||||||||||
Earnings before income taxes |
1,185.1 | (67.1 | ) | (273.0 | ) | 315.1 | 1,160.1 | |||||||||||||||||||||
Provision (benefit) for income taxes |
219.1 | (11.4 | ) | (71.0 | ) | (d) | 81.9 | (g) | 218.6 | |||||||||||||||||||
Net earnings (loss) |
966.0 | (55.7 | ) | (202.0 | ) | 233.2 | 941.5 | |||||||||||||||||||||
Net earnings (loss) attributable to noncontrolling interests |
(3.5 | ) | - | - | - | (3.5 | ) | |||||||||||||||||||||
Net earnings attributable to controlling interests |
$ | 969.5 | $ | (55.7 | ) | $ | (202.0 | ) | $ | 233.2 | $ | 945.0 | ||||||||||||||||
Basic net earnings per share (5) |
$ | 4.51 | $ | 3.84 | ||||||||||||||||||||||||
Diluted net earnings per share (5) |
$ | 4.42 | $ | 3.78 |
See accompanying notes to unaudited pro forma condensed combined financial information
9
Table of Contents
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 - Basis of presentation
The unaudited pro forma condensed combined financial information has been prepared by Gallagher in connection with the Company's acquisition of the Acquired Entity.
The unaudited condensed combined pro forma financial information and related notes were prepared in accordance with Article 11 of Regulation S-X and are based on the historical consolidated financial statements of the Company and the historical consolidated financial statements of the Acquired Entity, as adjusted to give effect to the pro forma adjustments described below.
The pro forma adjustments to the statements of earnings have been prepared as if the Transactions occurred on
Gallagher and the Acquired Entity's historical financial statements were prepared in accordance with
The audited consolidated financial statements and accompanying notes of the Acquired Entity as of and for the year ended
The accompanying unaudited pro forma condensed combined financial information and related notes were prepared using the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations ("ASC 805"), with Gallagher considered the accounting acquirer of the Acquired Entity. ASC 805 requires, among other things, that the assets acquired, and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. For purposes of the unaudited pro forma condensed combined balance sheet, the purchase price consideration has been allocated to the assets acquired and liabilities assumed of the Acquired Entity based upon management's preliminary estimate of their fair values as of
The pro forma adjustments are based upon available information and certain assumptions that Gallagher believes are reasonable. Management has included certain reclassification and policy alignment adjustments for consistency in presentation as indicated in the subsequent notes (see Note 2 for further details). The unaudited pro forma condensed combined financial information is provided for informational purposes only and does not purport to represent or be indicative of the consolidated results of operations or financial condition of the Company had the Transactions been completed as of the dates presented and should not be construed as representative of the future consolidated results of operations or financial condition of the combined entity.
10
Table of Contents
Note 2 - Reclassification adjustments
Certain balances were reclassified from the Acquired Entity's historical financial statements so its presentation would be consistent with that of Gallagher. These reclassifications are based on management's preliminary analysis and have no effect on separately reported net assets, equity or net earnings attributed to common shareholders of the Acquired Entity.
When the Company completes its detailed review of the Acquired Entity's chart of accounts and accounting policies, additional reclassification adjustments could be identified that, when conformed, could have a material impact on the combined Company's financial information. Refer to the table below for a summary of the reclassification adjustments made to the Acquired Entity's unaudited condensed consolidated balance sheet as of
Presentation |
Acquired Entity Presentation |
Historical Acquired Entity at September 30, 2024 |
Reclassification Adjustments |
Note | Historical Acquired Entity as adjusted For Arthur J. |
|||||||||||||
Cash and cash equivalents |
Cash and cash equivalents | 342.2 | 34.7 | (a | ) | 376.9 | ||||||||||||
Restricted cash | 60.0 | (60.0 | ) | (a | ) | - | ||||||||||||
Trust cash | 292.2 | (292.2 | ) | (a | ) | - | ||||||||||||
Fixed maturity securities | 37.8 | (37.8 | ) | (b | ) | - | ||||||||||||
Fiduciary assets |
- | 703.9 | (a | ) | 703.9 | |||||||||||||
Accounts receivable, net |
Accounts receivable, net | 1,040.9 | (386.4 | ) | (a | ) | 654.5 | |||||||||||
Prepaid expenses | 36.7 | (36.7 | ) | (b | ) | - | ||||||||||||
Other current assets |
Other current assets | 68.4 | 74.5 | (b | ) | 142.9 | ||||||||||||
Accounts receivable, noncurrent portion | 37.2 | (37.2 | ) | (c | ) | - | ||||||||||||
Fixed assets - net |
Fixed assets - net | 167.0 | - | 167.0 | ||||||||||||||
Deferred income taxes |
- | - | - | |||||||||||||||
Other noncurrent assets |
Other noncurrent assets | 92.9 | 37.2 | (c | ) | 130.1 | ||||||||||||
Right-of-use assets |
Operating lease right-of-use assets, net | 155.4 | - | 155.4 | ||||||||||||||
|
5,848.4 | - | 5,848.4 | |||||||||||||||
Amortizable intangible assets - net |
Definite-lived intangible assets, net | 3,042.4 | - | 3,042.4 | ||||||||||||||
Total assets |
11,221.5 | - | 11,221.5 | |||||||||||||||
Fiduciary liabilities |
- | 703.9 | (a | ) | 703.9 | |||||||||||||
Long-term debt, net, current portion | 33.3 | (33.3 | ) | (d | ) | - | ||||||||||||
Earn-out payables, current portion | 279.9 | (279.9 | ) | (e | ) | - | ||||||||||||
Carrier payables | 567.4 | (567.4 | ) | (a | ) | - | ||||||||||||
Accounts payable | 90.4 | (79.3
(11.1 |
)
) |
(a
(f |
)
) |
- | ||||||||||||
Customer advances | 57.2 | (57.2 | ) | (a | ) | - | ||||||||||||
Producer payables | 137.2 | (137.2 | ) | (f | ) | - | ||||||||||||
Reserve for unpaid losses and loss adjustment expenses, current portion | 5.6 | (5.6 | ) | (f | ) | - | ||||||||||||
Accrued expenses and other | 269.2 | (269.2 | ) | (f | ) | - | ||||||||||||
Accrued compensation and other current liabilities |
- | 703.0 | (f | ) (e) | 703.0 | |||||||||||||
Deferred revenue - current |
Deferred revenue - current | 69.8 | - | 69.8 | ||||||||||||||
Corporate related borrowings - current |
- | 33.3 | (d | ) | 33.3 | |||||||||||||
Corporate related borrowings - noncurrent |
- | 6,484.7 | (h | ) | 6,484.7 |
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Presentation |
Acquired Entity Presentation |
Historical Acquired Entity at September 30, 2024 |
Reclassification Adjustments |
Note | Historical Acquired Entity as adjusted For Arthur J. |
|||||||||||||
Deferred revenue - noncurrent |
Deferred revenue - noncurrent | 43.1 | - | 43.1 | ||||||||||||||
Earn-out payables, noncurrent portion | 66.1 | (66.1 | ) | (g | ) | - | ||||||||||||
Long-term debt, net, noncurrent portion | 6,484.7 | (6,484.7 | ) | (h | ) | - | ||||||||||||
Reserve for unpaid losses and loss adjustment expenses, noncurrent portion | 22.5 | (22.5 | ) | (g | ) | - | ||||||||||||
Operating lease liabilities, noncurrent portion | 130.6 | (130.6 | ) | (i | ) | - | ||||||||||||
Lease liabilities - noncurrent |
- | 130.6 | (i | ) | 130.6 | |||||||||||||
Deferred income taxes |
Deferred income taxes, net | 396.1 | - | 396.1 | ||||||||||||||
Other noncurrent liabilities |
Other noncurrent liabilities | 23.3 | 88.6 | (g | ) | 111.9 | ||||||||||||
Total liabilities |
8,676.4 | - | 8,676.4 | |||||||||||||||
Redeemable Series A Preferred Stock | 297.5 | - | 297.5 | |||||||||||||||
Total Mezzanine equity |
297.5 | - | 297.5 | |||||||||||||||
Common stock |
- | - | - | |||||||||||||||
Capital in excess of par value |
2,384.3 | - | 2,384.3 | |||||||||||||||
Accumulated other comprehensive loss |
Accumulated other comprehensive (loss) income | (6.4 | ) | - | (6.4 | ) | ||||||||||||
Retained earnings |
Retained earnings | (130.3 | ) | - | (130.3 | ) | ||||||||||||
Total liabilities and stockholder's equity |
11,221.5 | - | 11,221.5 |
(a) |
Represents the reclassification of the Acquired Entity's "Restricted cash" amount to "Cash and cash equivalents" and the reclassification of "Trust Cash" and "Agency bill accounts receivables" amounts to "Fiduciary assets" to conform to Gallagher's historical presentation. Additionally, represents the reclassification of the Acquired Entity's "Carrier payables," "Customer advances" and select "Accounts payable" amounts to "Fiduciary liabilities" to conform to Gallagher's historical presentation. |
(b) |
Represents the combination and reclassification of the Acquired Entity's "Fixed maturity securities" and "Prepaid expenses" amounts to "Other current assets" to conform to Gallagher's historical presentation. |
(c) |
Represents the reclassification of the Acquired Entity's "Accounts receivable, noncurrent portion" amounts to "Other noncurrent assets" to conform to Gallagher's historical presentation. |
(d) |
Represents the combination and reclassification of the Acquired Entity's "Long-term debt, net, current portion" amounts to "Corporate related borrowings - current" to conform to Gallagher's historical presentation. |
(e) |
Represents the combination and reclassification of the Acquired Entity's "Earn-out payables, current portion" amounts to "Accrued compensation and other current liabilities" to conform to Gallagher's historical presentation. |
(f) |
Represents the combination and reclassification of the Acquired Entity's "Accounts payable," "Producer payables," "Reserve for unpaid losses and loss adjustment expenses, current portion" and "Accrued expenses and other" amounts to "Accrued compensation and other current liabilities" to conform to Gallagher's historical presentation. |
(g) |
Represents the combination and reclassification of the Acquired Entity's "Earn-outs payables, noncurrent portion" and "Reserve for unpaid losses and loss adjustment expenses, noncurrent portion" amounts to "Other noncurrent liabilities" to conform to Gallagher's historical presentation. |
(h) |
Represents the combination and reclassification of the Acquired Entity's "Long-term debt, net, noncurrent portion" amounts to "Corporate related borrowings - noncurrent" to conform to Gallagher's historical presentation. |
(i) |
Represents the combination and classification of the Acquired Entity's "Operating lease liabilities, noncurrent portion" amounts to "Lease liabilities - noncurrent" to conform to Gallagher's historical presentation. |
12
Table of Contents
Refer to the tables below for a summary of the reclassification adjustments made to the Acquired Entity's unaudited condensed consolidated statements of comprehensive income for the nine months ended
Arthur J. Presentation |
Acquired Entity Presentation |
Historical Acquired Entity for the period ended 2024 |
Reclassification Adjustments |
Note | Historical Acquired Entity Adjusted for Arthur J. |
||||||||||||
Commissions |
- | 1,704.2 | (a | ) | 1,704.2 | ||||||||||||
Fees |
- | 330.3 | (a | ) | 330.3 | ||||||||||||
Commissions and fees | 2,034.5 | (2,034.5 | ) | (a | ) | - | |||||||||||
Supplemental revenues |
- | - | - | ||||||||||||||
Contingent revenues |
Contingent revenues | 182.4 | - | 182.4 | |||||||||||||
Investment income | 5.0 | (5.0 | ) | (b | ) | - | |||||||||||
Interest income, premium finance revenues and other income |
- | 18.5 | (b | ) (e) | 18.5 | ||||||||||||
Interest income | 14.1 | (14.1 | ) | (b | ) | - | |||||||||||
Reimbursements |
- | - | - | ||||||||||||||
Total revenues |
2,236.0 | (0.6 | ) | 2,235.4 | |||||||||||||
Compensation |
Compensation expense | 1,189.4 | - | 1,189.4 | |||||||||||||
Selling expense | 43.7 | (43.7 | ) | (c | ) | - | |||||||||||
Administrative expense | 300.9 | (300.9 | ) | (c | ) | - | |||||||||||
Transaction expense | 5.2 | (5.2 | ) | (c | ) | - | |||||||||||
Operating |
- | 349.8 | (c | ) | 349.8 | ||||||||||||
Reimbursements |
- | - | - | ||||||||||||||
Interest |
Interest | 439.5 | - | 439.5 | |||||||||||||
Depreciation and amortization expense | 276.6 | (276.6 | ) | (d | ) | - | |||||||||||
Depreciation |
- | 28.4 | (d | ) | 28.4 | ||||||||||||
Amortization |
- | 248.2 | (d | ) | 248.2 | ||||||||||||
Other (Income) expense, net | 0.6 | (0.6 | ) | (e | ) | - | |||||||||||
Debt extinguishment loss |
Debt extinguishment loss | 3.4 | - | 3.4 | |||||||||||||
Change in estimated acquisition earnout payables | 68.6 | - | 68.6 | ||||||||||||||
Total expenses |
2,327.9 | (0.6 | ) | 2,327.3 | |||||||||||||
Earnings before income taxes |
(91.9 | ) | - | (91.9 | ) | ||||||||||||
Provision (benefit) for income taxes |
Provision (benefit) for income taxes | (17.4 | ) | - | (17.4 | ) | |||||||||||
Net earnings |
(74.5 | ) | - | (74.5 | ) |
(a) |
Represents the reclassification of the Acquired Entity's "Commission and fees" amounts to "Commissions" and "Fees" to conform to Gallagher's historical presentation. |
(b) |
Represents the combination and reclassification of the Acquired Entity's "Investment income" and "Interest income" amounts to "Interest income, premium finance revenues and other income" to conform to Gallagher's historical presentation. |
(c) |
Represents the combination and reclassification of the Acquired Entity's "Selling expense," "Administrative expense" and "Transaction expense" amounts to "Operating" to conform to Gallagher's historical presentation. |
(d) |
Represents the reclassification of the Acquired Entity's "Depreciation and amortization" amounts to "Depreciation" and "Amortization" to conform to Gallagher's historical presentation. |
(e) |
Represents the reclassification of the Acquired Entity's "Other (Income) expense, net" amounts to "Interest income, premium finance revenues and other income" to conform to Gallagher's historical presentation. |
13
Table of Contents
Arthur J. Presentation |
Acquired Entity Presentation |
Historical Acquired Entity for the period ended 2023 |
Reclassification Adjustments |
Note | Historical Acquired Entity adjusted for Arthur J. |
||||||||||
Commissions |
- | 1,962.2 | (a) | 1,962.2 | |||||||||||
Fees |
- | 392.6 | (a) | 392.6 | |||||||||||
Commissions and fees | 2,354.8 | (2,354.8 | ) | (a) | - | ||||||||||
Supplemental revenues |
- | - | - | ||||||||||||
Contingent revenues |
Contingent revenues | 198.9 | - | 198.9 | |||||||||||
Investment income | 1.8 | (1.8 | ) | (b) | - | ||||||||||
Interest income, premium finance revenues and other income |
- | 34.5 | (b) (e) | 34.5 | |||||||||||
Interest income | 27.8 | (27.8 | ) | (b) | - | ||||||||||
Reimbursements |
- | - | - | ||||||||||||
Total revenues |
2,583.3 | 4.9 | 2,588.2 | ||||||||||||
Compensation |
Compensation expense | 1,389.3 | - | 1,389.3 | |||||||||||
Selling expense | 48.1 | (48.1 | ) | (c) | - | ||||||||||
Administrative expense | 344.1 | (344.1 | ) | (c) | - | ||||||||||
Transaction expense | 15.6 | (15.6 | ) | (c) | - | ||||||||||
Operating |
- | 407.8 | (c) | 407.8 | |||||||||||
Interest |
Interest | 492.9 | - | 492.9 | |||||||||||
Depreciation and amortization expense | 276.2 | (276.2 | ) | (d) | - | ||||||||||
Depreciation |
- | 28.2 | (d) | 28.2 | |||||||||||
Amortization |
- | 248.0 | (d) | 248.0 | |||||||||||
Other (Income) expense, net | (4.9 | ) | 4.9 | (e) | - | ||||||||||
Debt extinguishment loss |
Debt extinguishment loss | 3.2 | - | 3.2 | |||||||||||
Change in estimated acquisition earnout payables | 85.9 | - | 85.9 | ||||||||||||
Total expenses |
2,650.4 | 4.9 | 2,655.3 | ||||||||||||
Earnings before income taxes |
(67.1 | ) | - | (67.1 | ) | ||||||||||
Provision (benefit) for income taxes |
Provision (benefit) for income taxes | (11.4 | ) | - | (11.4 | ) | |||||||||
Net earnings |
(55.7 | ) | - | (55.7 | ) |
(a) |
Represents the reclassification of the Acquired Entity's "Commission and fees" amounts to "Commissions" and "Fees" to conform to Gallagher's historical presentation. |
(b) |
Represents the reclassification of the Acquired Entity's "Investment income" and "Interest income" amounts to "Interest income, premium finance revenues and other income" to conform to Gallagher's historical presentation. |
(c) |
Represents the combination and reclassification of the Acquired Entity's "Selling expense," "Administrative expense" and "Transaction expense" amounts to "Operating" to conform to Gallagher's historical presentation. |
(d) |
Represents the reclassification of the Acquired Entity's "Depreciation and amortization" amounts to "Depreciation" and "Amortization" to conform to Gallagher's historical presentation. |
(e) |
Represents the reclassification of the Acquired Entity's "Other (Income) expense, net" amounts to "Interest income, premium finance revenues and other income" to conform to Gallagher's historical presentation. |
14
Table of Contents
Note 3 - Financing adjustments
Prior to the close of the Transaction, Gallagher signed the Purchase Agreement on
(a) |
close on a follow-on offering of its common stock, whereby 31 million shares of common stock are expected to be issued for net proceeds of |
(b) |
close and fund a debt offering of |
Based on Gallagher's financing for the Transaction, the impacts to the condensed combined pro forma balance sheet were as follows:
(a) |
Reflects the cash proceeds of |
(b) |
Reflects the cash proceeds, net of issuance costs and underwriting discounts, related to issuance of the Notes. These Notes were issued at a principal amount of |
The impacts to the condensed combined pro forma statements of earnings were as follows:
(c) |
Reflects the pro forma interest expense and amortized issuance costs and discounts adjustment for the nine months ended |
(in millions) | Amount | |||
Notes principal |
$ | 4,950 | ||
Annual weighted average interest rate |
5.40 | % | ||
Annual interest on Notes |
$ | 270 | ||
Total Notes issuance cost and underwriting discount |
$ | 42.8 | ||
Notes term (years) |
12.5 | |||
Annual amortized debt issuance cost and discount |
$ | 3.0 | ||
Amortized debt issuance cost and discount for 9 months ended |
$ | 2.3 | ||
Pro forma interest and amortization expense for 9 months ended |
$ | 204.8 | ||
Pro forma interest and amortization expense for year-ended |
$ | 273.0 |
(d) |
Reflects the |
15
Table of Contents
Note 4 - Transaction accounting adjustments
Under the terms of the Purchase Agreement, the Company expects to acquire the Acquired Entity for total consideration of
(in millions) | Amount | |||
Total purchase consideration |
$ | 13,450.0 | ||
The following is a summary of the estimated fair values of the identifiable tangible and intangible assets acquired and liabilities assumed as if the Transaction occurred on
(in millions) | Amount | |||
Cash and cash equivalents |
$ | 376.9 | ||
Fiduciary assets |
703.9 | |||
Accounts receivable, net of allowance for credit losses |
654.5 | |||
Other current assets |
142.9 | |||
Fixed assets, net |
167.0 | |||
|
8,322.4 | |||
Definite-lived intangible assets, net |
5,724.1 | |||
Operating lease right-of-use assets, net |
155.4 | |||
Other noncurrent assets, net |
58.5 | |||
Total assets |
$ | 16,305.6 | ||
Fiduciary liabilities |
$ | 703.9 | ||
Accrued compensation and other current liabilities |
703.0 | |||
Deferred revenue, current |
69.8 | |||
Deferred revenue, noncurrent |
43.1 | |||
Lease liabilities, noncurrent |
130.6 | |||
Deferred income taxes, noncurrent |
1,093.3 | |||
Other noncurrent liabilities |
111.9 | |||
Total liabilities |
$ | 2,855.6 | ||
The preliminary estimates are based on the data available to Gallagher and may change upon completion of the final purchase price allocation. Any change in the estimated fair value of the assets and liabilities acquired may have a corresponding impact on the amount of the goodwill. In addition, only intangible assets were evaluated for fair value. The goodwill amount represents the total purchase consideration less the preliminary fair value of net assets acquired.
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The impacts to the condensed combined pro forma balance sheet from the Transaction were as follows:
(in millions) | Amount | |||
Cash consideration (b) |
$ | 13,450.0 | ||
Elimination of deferred commissions (c) |
71.6 | |||
Deferred tax adjustment (i) |
697.2 | |||
Fair value step up of intangibles (d) |
(2,681.7 | ) | ||
Elimination of historical Acquired Entity debt (a) |
(6,518.0 | ) | ||
Elimination of historical Acquired Entity equity (a) |
(2,545.1 | ) | ||
Total adjustment to goodwill |
2,474.0 | |||
Historical Acquired Entity goodwill |
5,848.4 | |||
Total goodwill from Transaction |
$ | 8,322.4 | ||
(a) |
Reflects adjustment to write off the equity (including retained earnings) of the Acquired Entity and reflects the repayment of the Acquired Entity's outstanding corporate borrowings, which is expected to occur as part of the transaction. |
(b) |
Reflects the |
(c) |
Reflects the reversal of deferred commissions in the Acquired Entity's Balance Sheet and recording of expenses as incurred to the pro forma combined statement of earnings, consistent with Company's accounting policy for costs to obtain contracts with customers. |
(d) |
Reflects the impact of fair value step up of acquired trade names and expiration lists, as compared to the carrying value for the Acquired Entity as of |
The impacts to the condensed combined pro forma statements of earnings from the Transaction were as follows:
(e) |
Reflects an adjustment to Amortization for the intangible expiration lists amortization expense based on the fair values and estimated useful life below. There was no previous expiration lists amortization expense in the Acquired Entity's historical financial results to remove. |
(in millions) | Amount | |||
Expiration lists fair value |
$ | 5,700.0 | ||
Estimated useful life |
15 years | |||
Annual straight line amortization expense |
$ | 380.0 | ||
9 months straight line amortization expense |
$ | 285.0 |
Reflects an adjustment to Amortization for the intangible trade names amortization expense based on the fair values and estimated useful life below. The historical amortization related to trade names has been adjusted as noted in tickmark (h).
(in millions) | Amount | |||
Trade names fair value |
$ | 24.0 | ||
Estimated useful life |
1 year | |||
Annual straight line amortization expense |
$ | 24.0 | ||
9 months straight line amortization expense |
- |
(f) |
Reflects the estimated one-time transaction-related costs incurred which have not been reflected in the Company's historical statements of earnings for the year ended |
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(g) |
Reflects the |
(h) |
Reflects the adjustment for the reversal of historical amortization and interest booked related to the Acquired Entity's debt, which is written off in (a) above and is not expected to legally convey as part of the Transaction. |
(i) |
Reflects the deferred tax balance sheet adjustment for the impact of purchase price adjustments for the fair value of intangible assets. Additionally, reflects the reclassification of the Company's deferred tax asset related to US book-tax differences to Deferred tax liabilities - noncurrent, to present the net deferred tax liability within Deferred tax liabilities - noncurrent: |
(in millions) | Amount | |||
Deferred tax liability for fair value intangible adjustment |
$ | 697.2 | ||
Company DTA reclassified to Deferred tax liabilities - noncurrent |
(1,016.8 | ) | ||
Net deferred tax adjustment to Deferred tax liabilities - noncurrent |
$ | (319.6 | ) | |
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Note 5 - Net earnings per share
Basic net earnings per share is computed by dividing net earnings by the weighted average number of common shares outstanding during the reporting period. Diluted net earnings per share is computed by dividing net earnings by the weighted average number of common and common equivalent shares outstanding during the reporting period. Common equivalent shares include incremental shares from dilutive stock options, which are calculated from the date of grant under the treasury stock method using the average market price for the period.
The following table sets forth the computation of pro forma basic and diluted net earnings per share (in millions, except per share data):
(in millions) |
Nine months Ended September 30, 2024 |
Year ended December 31, 2023 |
||||||
Net earnings attributable to controlling interests of Gallagher |
$ | 1,204.4 | $ | 969.5 | ||||
Net earnings attributable to controlling interests of Acquired Entity |
(74.5 | ) | (55.7 | ) | ||||
Pro Forma adjustments to net earnings attributable to controlling interest |
138.9 | 31.2 | ||||||
Pro Forma net earnings attributable to controlling interest |
1,268.8 | 945.0 | ||||||
Weighted average number of common shares outstanding |
218.5 | 214.9 | ||||||
Follow-on public offering |
31.0 | 31.0 | ||||||
Pro Forma weighted average number of common shares outstanding |
249.5 | 245.9 | ||||||
Dilutive effect of stock options using the treasury stock method |
4.4 | 4.4 | ||||||
Pro Forma weighted average number of common and common equivalent shares outstanding |
253.9 | 250.3 | ||||||
Pro Forma basic net earnings per share |
$ | 5.09 | $ | 3.84 | ||||
Pro Forma diluted net earnings per share |
$ | 5.00 | $ | 3.78 | ||||
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RISK FACTORS
Investing in our common stock involves risks, including the risks described below that are specific to shares of our common stock and those that could affect us and our business. You should not purchase shares of our common stock unless you understand these investment risks. Please be aware that other risks may prove to be important in the future. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. Before purchasing any shares of our common stock, you should consider carefully the risks and other information in this prospectus and the documents incorporated by reference herein, including the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended
Risks Relating to the Proposed Transaction
There can be no assurance that the Transaction will be completed or that we will realize the expected benefits of the Transaction.
Our ability to complete the Transaction may also be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein. Although we currently anticipate that the Transaction, should it occur, will be accretive to earnings per share (on an as adjusted earnings basis for estimated reduction in revenue as a result of non-renewal of clients, departed key brokers and other employees, and expected changes in operating expenses and other items that is not pursuant to
We may encounter integration challenges and the Transaction may not perform as expected.
We can provide no assurance that we will be able to successfully integrate the operations acquired in the Transaction or achieve expected cost savings or synergies from such integration, that the acquired operations will perform as expected or that we will not incur unforeseen obligations or liabilities. It is possible that our experience in running the operations acquired in the Transaction will require us to adjust our expectations regarding the impact of the acquisition on our operating results. In addition, integration efforts are anticipated to be complex and may divert management attention and resources, which could adversely affect our operating results.
There can be no assurance that we will be able to secure the required financing in connection with the acquisition on acceptable terms, at favorable pricing, in a timely manner or at all.
We expect to finance the Transaction using the net proceeds of this offering, available cash and available borrowings under our Revolving Credit Facility, other borrowings and/or, subject to market conditions and other factors, the concurrent notes offering. The completion of the Transaction is not conditioned on our ability to obtain financing. If our ability to raise funds through the capital markets is impacted for any reason, including, but not limited to, a deterioration in our financial results, poor economic conditions, or stock market volatility, we may be unable to complete equity and/or debt offerings on acceptable terms, at favorable pricing, in a timely manner, or at all. Additionally, the cost of financing the Transaction could be more expensive than expected. If we are unable to obtain such financing as anticipated, we may be compelled to specifically perform our obligations to complete the Transaction or could otherwise be subject to claims under the Purchase Agreement, each of which could have a material adverse effect on the Company.
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The unaudited pro forma condensed combined financial information reflecting the Transaction included in this prospectus is based on assumptions and is subject to change based on various factors.
We and the Acquired Entity have no prior history as a combined company and our assets and operations have not been managed on a combined basis. As a result, our unaudited pro forma condensed combined financial information included in this prospectus, which was prepared in accordance with Article 11 of Regulation S-X, and historical financial statements of our and the Acquired Entity's businesses are presented for informational purposes only and are not necessarily indicative of the financial position or results of operations that would have actually occurred had the Transaction and related financings been completed at or as of the dates indicated, nor is it indicative of the future operating results or financial position of the combined company if the Transaction and related financings are consummated.
Our unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies, or revenue enhancements that the combined company may achieve as a result of the Transaction, nor does it reflect the costs to integrate the operations of the Company or the costs necessary to achieve any cost savings, operating synergies, and revenue enhancements. Our unaudited pro forma condensed combined financial information included in this prospectus is based in part on certain assumptions regarding the Transaction and the related financings. We believe the assumptions underlying such unaudited pro forma condensed combined financial information are reasonable under the circumstances, however, such assumptions and estimates are preliminary and may not prove to be accurate over time. In addition, if and to the extent there are any changes in market conditions affecting the financings, then the pro forma condensed combined financial information and the future operating results or financial position of the combined company may be impacted, and such impact may be material. We have no obligation to update the pro forma condensed financial information incorporated by reference herein for any subsequent event and may not do so.
As a result, investors should not place any undue reliance on our unaudited pro forma financial information, and our actual results following the completion of the Transaction and related financings may differ from those that are anticipated.
Certain financial information related to the Acquired Entity presented in this prospectus is derived from financial statements that are not included herein and include certain non-GAAP measures and investors are cautioned not to place undue reliance on such information.
AssuredPartners is the operating subsidiary of the Acquired Entity. The Acquired Entity's financial information for the twelve months ended
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We have made certain assumptions relating to the Transaction which may prove to be materially inaccurate.
We have made certain assumptions relating to the Transaction, which assumptions involve significant judgement and may not reflect the full range of uncertainties and unpredictable outcomes inherent in the Transaction and may be materially inaccurate. These assumptions relate to numerous matters, including:
• |
our ability to realize the expected benefits of the Transaction; |
• |
projections of future revenue, EBITDAC and our earnings per share; |
• |
our ability to maintain, develop and deepen relationships with employees, including key brokers, and customers associated with the Acquired Entity; |
• |
our ability to issue equity and debt or any other financing, or to generate and maintain needed cash from operations, to complete the Transaction and the impact of such financing on our operating results or financial condition; |
• |
projections of future expenses and expense allocation relating to the Transaction and the Acquired Entity; |
• |
unknown or contingent liabilities associated with the Transaction or the Acquired Entity; |
• |
the amount of goodwill and intangibles that will result from the Transaction; |
• |
other purchase accounting adjustments that we may record in our financial statements in connection with the Transaction; |
• |
acquisition and integration costs, including restructuring charges and transaction costs; and |
• |
other financial and strategic risks of the Transaction. |
Risks Relating to the Offering
The price of our common stock may fluctuate significantly, and this may make it difficult for you to resell shares of common stock owned by you at times or at prices you find attractive.
The trading price of our common stock may fluctuate widely as a result of a number of factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have adversely affected and may continue to adversely affect the market price of our common stock. Among the factors that could affect our stock price are:
• |
general economic and political conditions such as recessions, economic downturns or other factors like new pandemics, inflation, worsening international relations, the wars in |
• |
fluctuations in our financial results, revenues and expenses; |
• |
quarterly variations in our operating results; |
• |
seasonality of our business cycle; |
• |
changes in the market's expectations about our operating results; |
• |
our ability to control expenses; |
• |
loss of revenues; |
• |
foreign currency and exchange rate fluctuations; |
• |
our operating results failing to meet the expectation of securities analysts or investors in a particular period; |
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• |
changes in financial estimates and recommendations by securities analysts concerning us or the financial or professional services industries in general; |
• |
operating and stock price performance of other companies that investors deem comparable to us; |
• |
news reports relating to trends in our markets, including any expectations regarding an upcoming "hard" or "soft" market; |
• |
changes in laws and regulations affecting our business; |
• |
material announcements by us or our competitors; |
• |
the impact or perceived impact of developments relating to our acquisitions such as the Transaction, including the possible perception by securities analysts or investors that such acquisitions divert management attention from our core operations; |
• |
market volatility; |
• |
general conditions in the insurance industry, including changes or consolidation in the insurance brokerage industry, the volatility of or decline in premiums or other adverse trends in the insurance industry; |
• |
our investments in geographic expansion and to increase our presence in existing markets; |
• |
our ability to successfully execute our strategic growth plans; |
• |
cyber-attacks or other cybersecurity incidents; |
• |
legal proceedings; |
• |
regulatory requirements, including international sanctions and the |
• |
sales of substantial amounts of common shares by our directors, executive officers or significant stockholders or the perception that such sales could occur. |
In recent years, the stock market has experienced significant price and volume fluctuations. This volatility frequently has occurred without regard to the operating performance of the affected companies. Hence, the price of our common stock could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price.
Our stock price may be negatively affected by fluctuations in our financial results.
The market price of our common stock may be subject to fluctuations due not only to general economic and stock market conditions but also to a change in sentiment in the market regarding our operations, business prospects, liquidity or this offering. Our operating results, revenues and expenses may also fluctuate for many other reasons, many of which are outside of our control, such as: competition; our ability to control expenses; loss of revenues; changes or consolidation in the insurance brokerage industry; the volatility of or declines in premiums or other adverse trends in the insurance industry; our investments in geographic expansion and to increase our presence in existing markets; interest rate fluctuations; successful execution of our strategic growth plans; managerial execution; employee retention; growing risks associated with international operations; foreign currency and exchange rate fluctuations; inflation; litigation; acquisitions of other companies or assets; or our investments in other corporate resources. In addition, changes in accounting policies or practices may affect our level of net income. Fluctuations in our financial results, revenues and expenses may cause the market price of our common stock to decline.
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There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.
Except as described under "Underwriters," we are not restricted from issuing additional shares of common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock. The issuance of any additional shares of common or of preferred stock or convertible securities could be substantially dilutive to holders of our common stock. Moreover, to the extent that we issue restricted stock units, stock appreciation rights, options or warrants to purchase our shares of our common stock in the future and those stock appreciation rights, options or warrants are exercised or as the restricted stock units vest, our shareholders may experience further dilution. Holders of our common stock have no preemptive rights that entitle holders to purchase their pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in increased dilution to our shareholders. The market price of our common stock could decline as a result of sales of shares of our common stock made after this offering or the perception that such sales could occur.
If securities or industry press or analysts cease covering our common stock, publish negative research or reports about our business, or if they change their recommendations regarding our common stock adversely, the share price and trading volume of our common stock could decline.
The trading market for shares of our common stock may be influenced by the articles, research and reports that industry or securities analysts and press publish about us or our business. If one or more of the analysts who cover us downgrade our common stock, or if industry press publishes negative articles about our company, the share price of our common stock would likely decline. If one or more of these analysts ceased coverage of our company or failed to regularly publish reports on us, we could lose visibility in the financial markets, which in tucould cause our share price or trading volume to decline.
The common stock is equity and is subordinate to our existing and future indebtedness and preferred stock.
Shares of our common stock are equity interests in the Company and do not constitute indebtedness. As such, shares of our common stock will rank junior to all indebtedness and other non-equity claims on the Company with respect to assets available to satisfy claims on the Company, including in a liquidation of the Company. Additionally, our board of directors is authorized to issue series of preferred stock without any action on the part of holders of our common stock. Holders of our common stock are subject to the prior dividend and liquidation rights of any holders of our preferred stock or depositary shares representing such preferred stock then outstanding.
We have not identified any specific use of the net proceeds of this offering in the event the Transaction does not close.
Consummation of the Transaction is subject to a number of conditions and, if the Purchase Agreement is terminated for any reason, our board of directors and management will have broad discretion over the use of the net proceeds we receive in this offering and might not apply the net proceeds in ways that increase the trading price of our common stock. Since the primary purpose of this offering is to provide funds to pay a portion of the Transaction consideration, we have not identified a specific use for the net proceeds in the event the Transaction does not occur. Any funds received may be used by us for any corporate purpose, which may include the pursuit of other business combinations, expansion of our operations, share repurchases or other uses. The failure of our management to use the net proceeds from this offering effectively could have an adverse effect on our business and may have an adverse effect on our earnings per share.
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USE OF PROCEEDS
We estimate that the net proceeds from this offering will be approximately $ . If the underwriters exercise their option to purchase additional shares in full, the net proceeds of this offering will be approximately $ . "Net proceeds" is what we expect to receive after paying the underwriting discount and commissions and other estimated expenses of the offering.
We expect to use the net proceeds of this offering to fund a portion of the cash consideration payable in connection with the Transaction and, to the extent that any proceeds remain thereafter, or if the Transaction is not completed, for general corporate purposes including other acquisitions. In addition to the net proceeds from this offering, we expect to use available cash, available borrowings under our Revolving Credit Facility or other borrowings to complete the Transaction. Subject to market conditions and other factors, we expect to raise additional amounts to fund the purchase price for the Transaction in the concurrent notes offering.
This offering is not conditioned on the closing of the Transaction or the concurrent notes offering, and there can be no assurance that the Transaction will be completed. The closing of the concurrent notes offering is not conditioned on the closing of this offering or the closing of the Transaction. The shares offered hereby will remain outstanding whether or not the Transaction is completed.
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DESCRIPTION OF CAPITAL STOCK
General
The following description of our capital stock is only a summary. For more complete information, you should refer to our restated certificate of incorporation (our "certificate of incorporation"), amended and restated by-laws (our "by-laws") and any amendments thereto, which we have filed with the
Common Stock
Under our certificate of incorporation, our board of directors, which we refer to as our board, is authorized to issue up to 400,000,000 shares of common stock. As of
No Preemptive, Redemption or Conversion Rights
Our common stock is not subject to redemption or retirement, is not subject to sinking fund provisions, does not have any conversion rights and is not subject to call. No holder of our common stock has preemptive or other rights to subscribe for additional shares of any class of our stock.
Voting Rights
Each holder of our common stock is entitled to one vote for each share of such stock standing in his or her name on the books of the Company. Holders of shares of our common stock do not have cumulative voting rights in the election of directors.
Board of Directors
Our board is not classified. Our certificate of incorporation establishes that the number of directors shall not be less than three nor more than fifteen, with the exact number of directors to be fixed from time to time by, or in the manner provided in, our by-laws. Our by-laws provide that, within such limits, the number of directors shall be determined by resolution of our board.
No Action by Stockholder Written Consent
Our certificate of incorporation provides that any action required or permitted to be taken by the stockholders must be taken at a duly called annual or special meeting of the stockholders, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied.
Power to Call Special Stockholder Meeting
Under
Dividend Rights
The holders of our common stock are entitled to receive such dividends as our board may declare from time to time, provided that any and all preferred dividends on our preferred stock for the then-current quarter have been set aside or paid, and all prior quarterly dividends on our preferred stock have been paid in full.
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Rights Upon Liquidation
Upon our liquidation, the holders of our common stock will receive ratably, in proportion to the number of shares held, all of our net assets remaining after the payment of any liquidation preference payable with respect to any preferred stock that may then be outstanding.
Preferred Stock
Under our certificate of incorporation, our board is authorized to issue up to 1,000,000 shares of preferred stock. Our preferred stock may be issued in one or more series, and for such consideration as our board may determine. Our board is authorized to determine the voting power of each series of preferred stock, which may range from no voting power to a maximum of one vote per share. If our board does not explicitly provide the voting power of any series of our preferred stock in the resolution or resolutions providing for the issuance of such series, the holders of that series of preferred stock have no voting power with respect to any matter. Our board is also authorized to fix the designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as provided for in the resolution or resolutions providing for the issuance of such shares of preferred stock.
All shares of one series of preferred stock must be of equal rank and identical in all respects. No dividend may be paid or declared on any particular series of preferred stock unless dividends are to be paid or declared pro rata on all shares of preferred stock that rank equally as to dividends with such particular series, and are outstanding at such time.
Shares of our preferred stock that are redeemed, converted, exchanged, purchased, retired or surrendered to us, or that have been issued and reacquired in any manner, shall, upon compliance with any applicable provisions of The General Corporation Law of the
As of the date of this prospectus, no shares of our preferred stock are issued and outstanding.
Actions to Increase or Decrease Amount of Authorized Shares
Subject to the rights of any outstanding series of preferred stock, any amendment to our certificate of incorporation that may increase or decrease the authorized capital stock of any class or classes may be adopted by the affirmative vote of the holders of a majority of the outstanding shares of our voting stock.
Forum Selection Clause
Under our by-laws, unless the Company selects or consents in writing to the selection of an alternative forum: (a) the sole and exclusive forum for any complaint asserting any internal corporate claims, to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be the
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MATERIAL
The following is a summary of the material
This summary is limited to non-
This discussion also does not address tax considerations applicable to a non-
• |
banks, insurance companies or other financial institutions; |
• |
partnerships or other pass-through entities; |
• |
tax-exempt organizations; |
• |
tax-qualified retirement plans; |
• |
dealers in securities or currencies; |
• |
traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; |
• |
certain |
• |
controlled foreign corporations; |
• |
passive foreign investment companies; |
• |
persons that own, or have owned, actually or constructively, more than 5% of our common stock; and |
• |
persons that will hold common stock as a position in a hedging transaction, "straddle" or "conversion transaction" for tax purposes. |
Accordingly, we urge you to consult with your own tax advisors regarding the
If a partnership (or other entity or arrangement treated as a partnership for
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YOU ARE URGED TO CONSULT YOUR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE
Definition of Non-
In general, a "non-
• |
an individual citizen or resident of |
• |
a corporation created or organized in or under the laws of |
• |
an estate, the income of which is subject to |
• |
a trust if (a) a court within |
Distributions on Our Common Stock
Distributions, if any, on our common stock will generally constitute dividends for
Dividends paid to a non-
If a non-
A non-
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date. Non-
Gain on Sale or Other Taxable Disposition of Shares of Our Common Stock
Subject to the discussion below regarding backup withholding, a non-
• |
the gain is effectively connected with a trade or business carried on by the non- |
• |
the non- |
• |
our common stock constitutes a " |
We believe we currently are not, and we do not anticipate becoming, a USRPHC for
Gain described in the first bullet point above will be subject to
Gain described in the second bullet point above will be subject to
Backup Withholding and Information Reporting
Generally, we must report annually to the
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a credit against a non-
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Foreign Accounts Tax Compliance Act ("FATCA")
Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as "FATCA"), a 30%
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UNDERWRITERS
Under the terms and subject to the conditions in an underwriting agreement dated as of the date of this prospectus (the "underwriting agreement"), the underwriters named below, for whom
|
Number of Shares |
|||
|
||||
|
||||
Total |
||||
The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters' option to purchase additional shares described below.
The underwriters propose to offer shares of common stock directly to the public at the public offering price listed on the cover page of this prospectus and may offer the shares to dealers at the public offering price less a concession not to exceed $ per share. After the initial offering of the shares of common stock to the public at the initial public offering price, the underwriters may change the public offering price and concessions.
We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase shares in approximately the same proportion as shown in the table above. If any additional shares of common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered. The following table shows the per share and total public offering price, underwriting discounts and commissions and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase up to an additional shares of common stock.
Total | ||||||||||||
Per Share |
No Exercise |
Full Exercise |
||||||||||
Public offering price |
$ | $ | $ | |||||||||
Underwriting discounts and commissions |
$ | $ | $ | |||||||||
Proceeds, before expenses, to us |
$ | $ | $ |
The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $ .
Our common stock has been approved for listing on the
We, all of our directors and certain of our officers have agreed that, without the prior written consent of
• |
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, |
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directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock; |
• |
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock, whether any such transaction described in this bullet or the immediately preceding bullet is to be settled by delivery of common stock or such other securities, in cash or otherwise; or |
• |
file any registration statement with the |
In addition, each such person agrees that, without the prior written consent of
The restrictions described in the immediately preceding paragraph do not apply to:
• |
the sale of shares to the underwriters; |
• |
the issuance by the Company of shares of common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus; |
• |
the establishment of a trading plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for the transfer of shares of common stock, provided that (i) such plan does not provide for the transfer of common stock during the Restricted Period and (ii) to the extent a public announcement or filing under the Exchange Act, if any, is required or voluntarily made regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of common stock may be made under such plan during the Restricted Period; |
• |
the filing by the Company of a registration statement on Form S-8 or a successor form thereto in respect of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock (i) issued under or granted pursuant to stock plans described in this prospectus or (ii) issued under or granted pursuant to the Company's |
• |
the entry into an agreement providing for the issuance by the company of shares of common stock or any security convertible into or exercisable for common stock in connection with the acquisition by the Company or its subsidiaries of the securities, business, property or other assets of another person or entity or pursuant to an employee benefit plan assumed by the company in connection with such acquisition, and the issuance of any such securities pursuant to any such agreement; |
• |
the entry into an agreement providing for the issuance of shares of common stock or any security convertible into or exercisable for shares of common stock in connection with joint ventures, commercial relationships or other strategic transactions, and the issuance of any such securities pursuant to any such agreement, provided that in the case of any such transaction described in this bullet or the immediately preceding bullet, the aggregate number of shares of common stock or any security convertible into or exercisable for common stock shall not exceed 5% of the total number of shares of common stock issued and outstanding immediately following the completion of this offering; |
• |
grants of stock options, stock awards, restricted stock or other equity awards and the issuance of common stock or securities convertible into or exercisable for common stock (whether upon the exercise of stock options, the vesting of restricted stock units or otherwise) to employees, officers, directors, advisors or consultants of the company (i) pursuant to the terms of a plan in effect on the date |
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of this prospectus and described in this prospectus or (ii) pursuant to any new plan that becomes effective after the date hereof for the purpose of granting retention, incentive, replacement or inducement awards, provided that the Company shall cause each newly appointed director or executive officer that is a recipient of such securities to enter into a lock-up agreement substantially in the form executed in connection with this offering covering the remainder of the Restricted Period; |
• |
transactions relating to shares of common stock or other securities acquired in open market transactions after the initial offering of the shares of common stock, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with subsequent sales of common stock or other securities acquired in such open market transactions; |
• |
transfers of shares of common stock or any security convertible into common stock as a bona fide gift, distributions of shares of common stock or any security convertible into common stock to limited partners, general partners, managers, directors, officers, employees, members, stockholders or trust beneficiaries of such persons, transfers or dispositions of shares of common stock or any security convertible into or exercisable or exchangeable for common stock by will or other testamentary document or by intestacy, transfers or dispositions of shares of common stock or any security convertible into or exercisable or exchangeable for common stock to any trust for the direct or indirect benefit of such persons or the immediate family of such persons in a transaction not involving a disposition for value (for purposes of this letter agreement, "immediate family" shall mean any relationship by blood, marriage, domestic partnership or adoption no more remote than first cousin, and shall include any former spouse), transfers of shares of common stock or any security convertible into or exercisable or exchangeable for common stock that occur by operation of law pursuant to a qualified domestic order or in connection with a divorce settlement (provided that, in the case of any transfer or distribution described in this bullet, (i) each donee or distributee shall sign and deliver a lock-up agreement substantially in the form executed in connection with this offering, except that up to an aggregate of 50,000 shares of common stock may be transferred as a bona fide gift without the donee or distributee being required to sign and deliver a lock-up agreement substantially in the form executed in connection with this offering, and (ii) no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of common stock, shall be required or shall be voluntarily made during the Restricted Period); or |
• |
the exercise of options to purchase shares of common stock granted under a stock incentive plan or stock purchase plan described in this prospectus and outstanding as of the date of this prospectus or the exercise of warrants to purchase shares of common stock (or any security convertible into or exercisable or exchangeable for common stock) described in this prospectus and outstanding as of the date of this prospectus, provided that the underlying common stock continues to be subject to the restrictions set forth in the lock-up agreement and, provided further that any public filing or public announcement under Section 16(a) of the Exchange Act required or voluntarily made during the Restricted Period in connection with the exercise of such stock option or warrant shall clearly indicate in the footnotes thereto or comments section thereof that the filing relates to the exercise of a stock option or warrant, as the case may be, that no shares of common stock were sold by the reporting person and that the shares of common stock received upon exercise of the stock option or warrant are subject to a lock-up agreement with the underwriters of this offering. |
In connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling shares of our common stock in the open market for the purpose of preventing or retarding a decline in the market price of the common stock while this offering is in progress. These stabilizing transactions may include making short sales of our common stock, which involves the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering, and purchasing shares of common stock on the open market to cover positions created by short sales.
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Short sales may be "covered" shorts, which are short positions in an amount not greater than the underwriters' option to purchase additional shares referred to above, or may be "naked" shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their option to purchase additional shares, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through the option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.
The underwriters have advised us that, pursuant to Regulation M of the Securities Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the common stock, including the imposition of penalty bids. This means that if the Representatives purchases common stock in the open market in stabilizing transactions or to cover short sales, the Representatives can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by it.
These activities may have the effect of raising or maintaining the market price of the common stock or preventing or retarding a decline in the market price of the common stock, and, as a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of these liabilities.
The underwriters and their respective affiliates are full-service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities.
Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for us or our affiliates, for which they received or will receive customary fees and expenses.
In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments, including serving as counterparties to certain derivative and hedging arrangements, and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their customers, and such investment and securities activities may involve our securities or instruments. Such investment and securities activities may have involved, and in the future may involve, our securities and instruments. If any of the underwriters or their affiliates has a lending relationship with us, certain of those underwriters or their affiliates may hedge their credit exposure to us consistent with their customary risk management policies. Typically, such underwriters and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments. We expect that certain of the underwriters in this offering will also act as underwriters in the concurrent notes offering. Additionally, in connection with the Transaction,
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Selling Restrictions
The shares of common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (
Securities legislation in certain provinces or territories of
The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
European Economic Area ("EEA")
This prospectus has been prepared on the basis that any offer of the shares of common stock in any Member State of the EEA will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of securities. The expression "Prospectus Regulation" means Regulation (EU) 2017/1129 (as amended or superseded). For the avoidance of doubt, whilst this document is referred to as a 'prospectus,' it is not a prospectus for the purposes of the Prospectus Regulation.
The shares of common stock are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA. For the purposes of this provision:
(a) |
the expression "retail investor" means a person who is one (or more) of the following: |
(i) |
a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); |
(ii) |
a customer within the meaning of Directive (EU) 2016/97 (as amended, the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or |
(iii) |
not a qualified investor as defined in Article 2(e) of the Prospectus Regulation; and |
(b) |
the expression "offer" includes the communication in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe for those securities. |
Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling packaged retail and insurance based investment products or otherwise making them available to retail investors in the EEA has been prepared, and therefore offering or selling the shares of common stock or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
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In the EEA, this prospectus and any other material in relation to the shares of common stock are only being distributed to, and are only directed at, "non-retail investors" (being persons who are not "retail investors" as defined in this section titled "European Economic Area") and any investment or investment activity to which this prospectus relates is available only to, and will be engaged in only with, non-retail investors. This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by any recipients to any other persons in the EEA. Any person in the EEA who is a "retail investor" should not act or rely on this prospectus or its contents. Each person in the EEA who purchases any of the shares of common stock will be deemed to have represented, warranted, acknowledged and agreed that they are a non-retail investor.
This prospectus has been prepared on the basis that any offer of the shares of common stock in the
The shares of common stock are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the
(a) |
the expression "retail investor" means a person who is one (or more) of the following: |
(i) |
a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the |
(ii) |
a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (as amended, the "FSMA") and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or |
(iii) |
not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA; and |
(b) |
the expression "offer" includes the communication in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe for those securities. |
Consequently, no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (the "
In the
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in investment activity (within the meaning of section 21 of the FSMA) in connection with the issue or sale of any shares of common stock may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by any recipients to any other persons in the
In the
• |
has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares of common stock in circumstances in which Section 21(1) of the FSMA is complied with or does not apply; and |
• |
has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of common stock in, from or otherwise involving the |
References in this section titled "
This prospectus is not intended to constitute an offer or solicitation to purchase or invest in the shares of common stock. The shares of common stock may not be publicly offered, directly or indirectly, in
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the
In relation to its use in the DIFC, this document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the securities may not be offered or sold directly or indirectly to the public in the DIFC.
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No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the
Any offer in
The shares of common stock applied for by
This prospectus contains general information only and do not take account of the investment objectives, financial situation or particular needs of any particular person. They do not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
The shares of common stock have not been offered or sold and will not be offered or sold in
The shares of common stock have not been and will not be registered under the Financial Instruments and Exchange Law of
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This prospectus has not been and will not be registered as a prospectus under the Securities and Futures Act, Chapter 289 of
It is a condition of the offer that where the shares of common stock are subscribed for or acquired pursuant to an offer made in reliance on Section 275 of the SFA by a Relevant Person which is:
(a) |
a corporation (which is not an Accredited Investor), the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an Accredited Investor; or |
(b) |
a trust (where the trustee is not an Accredited Investor), the sole purpose of which is to hold investments and each beneficiary of the trust is an individual who is an Accredited Investor, securities, |
or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation and the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust has subscribed for or acquired the shares of common stock except:
(1) |
to an Institutional Investor, an Accredited Investor, a Relevant Person or which arises from an offer referred to in Section 275(1A) of the SFA (in the case of that corporation) or Section 276(4)(i)(B) of the SFA (in the case of that trust); |
(2) |
where no consideration is or will be given for the transfer; |
(3) |
where the transfer is by operation of law; |
(4) |
as specified in Section 276(7) of the SFA; or |
(5) |
as specified in Regulation 37A of the Securities and Futures (Offers of Investments) ( |
The shares of common stock have not been and will not be registered or filed with, or approved by, the
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authority of
The shares of common stock have not been, and are not being, publicly offered, sold, promoted or advertised in the
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VALIDITY OF THE COMMON STOCK
The validity of the common stock offered hereby will be passed upon for us by
EXPERTS
The consolidated financial statements and related financial statement schedule of
The audited historical financial statements of the Acquired Entity attached as Exhibit 99.2 in
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the informational requirements of the Exchange Act and, in accordance with these requirements, we file annual, quarterly and current reports, proxy statements and other information relating to our business, financial condition and other matters with the
Our filings are available to the public through the website maintained by the
INCORPORATION BY REFERENCE
The
We are incorporating by reference our filings listed below and any additional documents that we may file with the
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Form 10-Q and Current Reports on Form 8-K; except we are not incorporating by reference any information furnished (but not filed) under Item 2.02 or Item 7.01 of any Current Report on Form 8-K or corresponding information furnished under Item 9.01 of Form 8-K (or included as an exhibit) in any past or future current report on Form 8-K that we may file with the
• |
Our Annual Report on Form10-K for the fiscal year ended |
• |
The portions of our proxy statement for our 2024 annual meeting of stockholders filed with the |
• |
Our Quarterly Reports on Form 10-Q for the quarterly periods ended |
• |
Our Current Report on Form 8-K filed on February15, 2024, March14, 2024, May8, 2024, July25, 2024 (Item 5.02 only), and |
• |
The description of our common stock contained in our Registration Statement on Form 8-A (registration no. 0-13480), filed with the |
Information in this prospectus supersedes related information in the documents listed above and information in subsequently filed documents supersedes related information in both this prospectus and the incorporated documents.
You may request orally or in writing, and we will provide you with, a copy of these filings, at no cost, by calling us at (630) 773-3800 or by writing to us at the following address:
General Counsel
These filings and reports can also be found on our investor relations website, located at https://investor.ajg.com. Additionally, you may obtain copies of any of these through the
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$
Common Stock
Prospectus
December , 2024
Joint Book-Running Managers
Morgan Stanley
Table of Contents
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses (other than underwriting compensation) to be incurred by us in connection with the issuance and distribution of our securities being registered hereby are:
|
$ | * | ||
Accounting fees and expenses |
60,000 | |||
Legal fees and expenses |
475,000 | |||
Printing and miscellaneous fees |
37,000 | |||
Total expenses |
$ | ** |
* |
Deferred in accordance with Rules 456(b) and 457(r) of the Securities Act of 1933, as amended, or the Securities Act. |
** |
Estimated expenses are not presently known. |
Item 15. Indemnification of Directors and Officers.
Gallagher is incorporated under the Delaware General Corporation Law (the "DGCL").
Section 145(a) of the DGCL provides that a
Section 145(b) of the DGCL provides that a
Section 145 of the DGCL further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145 of the DGCL or in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith; and that indemnification provided for by Section 145 of the DGCL shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and that the corporation shall have power to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against such
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person and incurred by such person in any such capacity or arising out of such person's status as such whether or not the corporation would have the power to indemnify such person against such liability under Section 145 of the DGCL.
Section 102(b)(7) of the DGCL provides that a corporation's certificate of incorporation may provide a provision that eliminates or limits the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provisions shall not eliminate or limit the liability of a director (1) for any breach of the director's duty of loyalty to the corporation or its stockholders; (2) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (3) under Section 174 of the DGCL; or (4) for any transaction from which the director derived an improper personal benefit. No such provision shall eliminate or limit the liability of a director for any act or omission occurring before the date when such provision becomes effective.
Article Seven of Gallagher's Amended and Restated By-laws provide for the indemnification of each of Gallagher's directors, officers, employees or agents to the full extent permitted by applicable law, including, without limitation, the DGCL.
Article Seven of Gallagher's Amended and Restated By-laws provides that Gallagher shall indemnify any person in connection with any action, suit or proceeding brought or threatened by reason of the fact that he or she is or was one of Gallagher's directors, officers, employees or agents, or is or was serving at Gallagher's request as a director, officer, employee or agent of another enterprise, against all costs actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to Gallagher's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Similar indemnity is permitted to be provided to such persons in connection with an action or suit by Gallagher or in Gallagher's right, and provided further that such person shall not have been adjudged liable to Gallagher, unless, in view of all the circumstances of the case, the court in which the action or suit was brought determines that such person despite the adjudication of liability is fairly and reasonably entitled to indemnity for such expenses.
Article Twelve of Gallagher's Restated Certificate of Incorporation eliminates the liability of Gallagher's directors or officers for monetary damages for breach of fiduciary duty as a director or officer except to the extent such exemption from liability or limitation is not permitted by the DGCL. It further provides that any amendment, modification or repeal of the foregoing sentence will not adversely affect any right or protection of any of Gallagher's directors or officers in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.
Gallagher also maintains and pays premiums on a directors' and officers' liability insurance policy and has entered into indemnity agreements with its directors and officers. The provisions of each indemnity agreement alter or clarify the statutory indemnification in the following respects: (1) indemnity will be explicitly provided for settlements in derivative actions; (2) prompt payment of litigation expenses will be provided in advance of indemnification; (3) prompt indemnification of advances of expenses will be provided unless a determination is made that the director or officer has not met the required standard; (4) the director or officer will be permitted to petition a court to determine whether his or her actions meet the standards required; and (5) partial indemnification will be permitted in the event that the director or officer is not entitled to full indemnification. In addition, each indemnity agreement specifically includes indemnification with respect to actions, suits or proceedings brought under and/or predicated upon the Securities Act and/or the Securities Exchange Act.
The preceding summary is qualified in its entirety by Gallagher's Restated Certificate of Incorporation and Amended and Restated By-laws, and the indemnity agreements described above.
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Item 16. Exhibits
The following exhibits are filed herewith or incorporated herein by reference.
‡ |
Filed herewith. |
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Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(a) |
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(1) |
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
(2) |
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Filing Fee Tables" table in the effective registration statement; and |
(3) |
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
provided, however, that paragraphs (1), (2) and (3) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(b) |
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(c) |
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(d) |
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
(1) |
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
(2) |
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
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(e) |
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(1) |
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(2) |
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(3) |
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(4) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(f) |
That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(g) |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. |
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SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the
By: | /s/ |
|
Chairman and Chief Executive Officer (Principal Executive Officer) |
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POWER OF ATTORNEY
We, the undersigned directors and officers, do hereby constitute and appoint
Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signatures | Title | Date | ||
/s/ |
Chairman, Chief Executive Officer and Director (Principal Executive Officer) | |||
/s/ |
Vice President and Chief Financial Officer (Principal Financial Officer) | |||
/s/ |
Controller (Principal Accounting Officer) |
|||
/s/ |
Director | |||
/s/ |
Director | |||
/s/ |
Director | |||
/s/ |
Director | |||
/s/ |
Director | |||
/s/ |
Director | |||
/s/ |
Director | |||
/s/ |
Director | |||
/s/ |
Director |
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Attachments
Disclaimer
Arthur J.
Primary Offering Prospectus (Form 424B2)
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