Wesfarmers to Sell Insurance Broking Operations For A$1.01 Billion

   By Robb M. Stewart 
 

MELBOURNE, Australia--Wesfarmers Ltd. (WES.AU), a conglomerate with assets ranging from coal mines to one of Australia's largest supermarket chains, is completing its exit from insurance with a deal to sell its broking and funding operations to Arthur J. Gallagher & Co. (AJG) for 1.01 billion Australian dollars (US$938.5 million).

The disposal comes on the heels of an agreement in December to sell Wesfarmers' local insurance underwriting business to Insurance Australia Group Ltd. (IAG.AU) for A$1.85 billion. When completed, the transactions are expected to together result in a pretax profit of between A$1.01 billion and A$1.09 billion, the Perth-based company said.

The insurance broking businesses being sold to Gallagher include OAMPS Insurance Brokers in Australia, OAMPS U.K. and Crombie Lockwood in New Zealand. The premium funding operations in Australia and New Zealand are made up of Lumley Finance and Monument Premium Funding.

The sale, which includes an additional A$150 million to repay the funding operations, is subject to a number of conditions including approval from the Foreign Investment Review Board in Australia, the Overseas Investment Office in New Zealand and the Financial Conduct Authority in the U.K. Wesfarmers said in a statement that satisfying these conditions could take several months.

Gallagher separately said the deal will significantly expand its presence in Australia and New Zealand, giving it a platform for growth throughout Australasia. The Illinois-based company said it plans to finance the acquisition using free cash, borrowing on a line of credit and proceeds from issuing equity.

Write to Robb M. Stewart at [e-mail]

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