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Highlights:
- AUB Group Limited has entered a binding agreement to purchase Tysers.
- AUB is undertaking an equity capital raising to finance the acquisition.
- The company, via an ASX announcement, shared, its shares are on a trading halt till tomorrow (10 May).
On the ASX today, Insurance broking company, AUB Group Limited (ASX:AUB), announced that it has signed a binding agreement to purchase Tysers, a specialist international insurance broker from London, UK.
The acquisition, as claimed by AUB, is part of its strategy to provide international client support and accelerate scale. The purchase price is AU$880 million on a debt-free basis with additional post-acquisition consideration based on revenues generated later.
Meanwhile, on the ASX, AUB Group Limited's shares have entered a requested trade halt to raise equity capital for financing the acquisition. AUB shares will possibly be available for trade on the ASX once it releases an announcement for the outcome of its institutional accelerated entitlement offer. AUB shares shall remain in a trading halt until normal trading starts on 10 May 2022.
As of date, AUB's share price on the ASX is AU$22.360 each, with a market capitalisation of AU$1.66 billion.
More about the acquisition of Tysers by AUB Group Limited
Tysers is reportedly the sixth largest insurance broker at Lloyds, the largest insurance marketplace worldwide. The acquisition of Tysers is thus anticipated to provide AUB Group with the ability to access a diverse range of risks and insurances and help it accelerate the establishment of new agencies.
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Macquarie Capital is the financial adviser to AUB Group Limited on the current acquisition. It will, together with Goldman Sachs, as joint lead managers, will also be the joint bookrunner and joint underwriters to the Equity raising.
Tysers is expected to provide AUB with specialist capabilities and allow AUB to capture further economics in the insurance broking value chain. The short term gross written premiums are estimated in the ASX release to be around AU$200 million.
The direct access that AUB will get to Lloyd's is expected to provide AUB's networks and agencies in Australia and New Zealand with additional new business while providing differentiated exclusive products. Furthermore, AUB has also identified operational cost rationalisation and margin enhancement opportunities of about AU$25 million worth of run-rate synergies to be realised within 18 months of acquisition completion.
AUB Group Limited's FY22 guidance and dividend payout
Post the group's H1-22 results announced on 22 February 2022, AUB foresees favourable operating conditions for its business. It has, therefore, reaffirmed its full-year FY22 guidance.
In terms of distributions, AUB is still targeting a 50-70% dividend payout ratio, which is reportedly in line with its current dividend range. The insurance broker expects to pay a dividend on existing and new shares in H2-22.
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