In an effort to strengthen its foothold in Kansas, Arthur J. Gallagher & Co. (AJG - Analyst Report) acquired Overland Park, KS-based RJ Dutton Incorporated (RJ Dutton) for an undisclosed amount.
Founded in 1995, RJ Dutton provides employee benefit consultation and brokerage services. The company provides these services to self-funded and large group clients across the nation. It also offers designing of benefits plan, group purchasing programs and several consumer directed plans. RJ Dutton specializes in the energy, medical, professional sports, retail, mining and hospitality industries.
The acquisition is thus expected to enrich Arthur J. Gallagher & Co.’s employee benefits operations besides adding strength to its client base in Kansas.
Following the acquisition, employees of RJ Dutton will continue to work in their current location, led by John Neumaier, the leader of south central employee benefit consulting and brokerage operations of Arthur J. Gallagher & Co.
Arthur J. Gallagher & Co. has been continually undertaking acquisitions to ramp up its growth profile. In the third quarter of 2013, the insurance broker undertook six acquisitions. This compares favorably with five acquisitions (with annualized revenues totaling $35.9 million) closed in the second quarter. With the latest acquisition, the tally reaches sixteen till date.
Arthur J. Gallagher & Co.’s strong financial position continues to support its robust acquisition strategy. Shares of this insurance broker gained nearly 27% riding on the strength of its impressive inorganic growth story.
With optimism over the current acquisitions and solid execution, Arthur J. Gallagher & Co. is witnessing upward estimate revisions over past few weeks. 4 of 11 estimates were raised for 2013 while 5 of 12 estimates moved north for 2014. The Zacks Consensus Estimate for 2013 and 2014 is currently pegged at $2.20 and $2.60 respectively.
The estimates translate to a year-over-year improvement of 27.2% and 18.2% respectively. Arthur J. Gallagher & Co. presently holds a Zacks Rank #2 (Buy).
Among other insurance brokers following the inorganic growth route, Mercer, the consulting wing of Marsh & McLennan Companies Inc. (MMC - Analyst Report), announced its intention to purchase the pension wind-up operations of PricewaterhouseCoopers (PwC) in Canada in August. Brown & Brown Inc. (BRO - Analyst Report) closed its merger with Beecher Carlson Holdings, Inc. in July. In May, eHealth, Inc. (EHTH - Snapshot Report) closed the acquisition of Mass.-based PlanPrescriber, Inc.