SRG Group will become a top 10 insurance broker in Western Australia after finalising the acquisition of Gibbscorp, as two big global competitors pursue their own merger.
SRG, which is half-owned by ASX-listed AUB Group, will pay cash to acquire 100 per cent of Gibbscorp.
Gibbscorp’s 10 staff will relocate from Como to SRG’s Perth CBD office and its three shareholders will take executive roles with the combined group.
Chief executive Hank Jeuring will become executive director corporate at SRG.
That was agreed after the two firms signed a letter of intent about two months ago.
The combined firm will have about 50 staff, including eight in its Queensland office.
This makes SRG the seventh largest insurance broker in WA, just below Lockton, according to the latest industry ranking in Business News’ Data & Insights.
SRG managing director Rod Fitzgerald said the merger would strengthen the firm’s profile in the mid-market and corporate segments.
He added the Gibbscorp team would bring people and skills to complement SRG’s team.
The merger will also allow the group to achieve substantial cost savings.
“The alignment between people, clients and business ethos makes this merger a logical fit,” he said.
“It’s not just a sound financial opportunity but, more importantly, a cultural fit that will deliver a more enhanced experience for our clients.”
Mr Gibbs said his firm had significant growth opportunities that were on hold due to the shortage of resources.
“The combined strength of Gibbscorp and SRG will ensure we are a major player in the Australian market,” he said.
“We have ambitious growth expectations, and we will be putting the strategic plans into motion.”
They announced a month ago that Willis had agreed to sell its reinsurance business to another big global player, Arthur J Gallagher, for $US3.5 billion.
However, this has failed to appease the US Department of Justice, which said last week the planned merger would reduce competition, especially for big companies seeking insurance cover.
The Australian Competition and Consumer Commission has expressed concern about the proposed merger, saying it could significantly lessen competition in the supply of commercial risk, reinsurance and employee benefits broking.
The proposed merger comes two years after Marsh boosted its global market share by acquiring Jardine Lloyd Thompson.