Arthur J. Gallagher to acquire Cadence Insurance for $904M in cash

Arthur J. Gallagher & Co. (AJG) announced it has signed a definitive agreement to acquire Baton Rouge, Louisiana-headquartered Cadence Insurance, a wholly-owned subsidiary of Cadence Bank (CADE) for $904M in cash. The transaction is subject to regulatory approval and is expected to close during the fourth quarter of 2023. Key highlights: Transaction is financially compelling with estimated 24% tangible book value per share3 accretion and 160 bps improvement in CET1. On an after-tax basis, the immediate net capital increase is expected to be approximately $620M and net cash proceeds are estimated at $650M. The significant capital creation bolsters the Company’s balance sheet flexibility and profitability profile, while providing flexibility for capital redeployment to drive shareholder value. The sale is expected to be slightly positive to earnings per share through the use of cash proceeds to reduce wholesale borrowings. Further net income and earnings per share enhancements are anticipated as generated capital is deployed through strategic and franchise growth initiatives over time. Cadence anticipates the transaction, which is subject to standard closing conditions, will close in the fourth quarter of 2023. Cadence Insurance executive leadership, management and employees will join Gallagher following the sale.