Lloyd’s stalwart Jardine Lloyd Thompson bows to £5bn US buyout

Giant US insurance and consulting firm Marsh & McLennan on Tuesday swooped on Jardine Lloyd Thompson in a £4.9 billion deal that shakes up the London market.

JLT, 40% owned by Jardine Matheson, said it accepted the all-cash offer, but hoped that Marsh would respect what it had bought.

Chief executive Dominic Burke, who has led JLT for 13 years, admitted: “This is an emotional day for me and everyone at JLT.” But he pledged: “The entrepreneurial spirit that defines JLT will continue to prosper.”

Jobs are at risk — perhaps 5% of the combined group could go. JLT employs 4000 in the UK.

Marsh said it wants to extend its reach into regions and business lines where JLT is strong, such as Latin America and Asia and retirement products

Burke will take a role at Marsh once the deal is completed. He took a swipe at rivals who have grown at “an extraordinary pace” via debt and money from private equity.

He said: “We are a jewel in this industry. We will stand out as a beacon of excellence. We have grown our business organically. We have created an environment where people can give their best. People value that.”

While it is not clear the JLT brand will survive, Burke said: “The ethos and the culture will live and flourish. We can move mountains.”

The Marsh offer is priced at 1915p a share, a 34% premium to the closing price last night.

It values the JLT’s equity at £4.3 billion and includes taking on JLT’s £600 million of debt. JLT stock jumped 32% to 1894p.

The takeover adds to a surge of merger action in London’s insurance sector, including large acquisitions of Lloyd’s of London stalwarts XL Catlin, Chaucer and Aspen in recent months.

Marsh chief executive Dan Glaser said: “I have come to know, and respect, Dominic Burke and his team from my time both at MMC and as an underwriter. I am confident that with the addition of the talented colleagues of JLT, Marsh & McLennan will be an even stronger and more dynamic company.”

Marsh has revenue of $14 billion (nearly £11 billion) a year and expects the JLT deal to take that to $17 billion. JLT is one of the biggest players in the Lloyd’s of London market. Brexit does not seem to have been an issue for either side. “We are committed to this market,” said Burke. “London is a centre of excellence.”

JLT was founded as part of Jardine Matheson in 1972. It joined the London Stock Exchange in 1991. Marsh, headquartered in New York, is a member of the S&P 500. It was founded in 1905. The company lost some 300 staff in the 9/11 terror attacks.

Goldman Sachs is advising Marsh on the deal, with Mark Sorrell taking the UK lead. JP Morgan, led by Conor Hillery, is advising JLT.