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 robb.stewart@wsj.com
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