PSC Insurance Group agrees to acquire 2 UK brokers

PSC Insurance Group Ltd. agreed to acquire two U.K.-based commercial small and medium-enterprise broking businesses — Trust Insurance Services Ltd. and Abaco Insurance Brokers Ltd. — for a combined total of £36.5 million, or roughly A$66 million.

PSC Insurance said it will acquire Trust Insurance Services for roughly £15.5 million, excluding net assets, payable in three tranches. The Australian company will pay 70%, or £10.9 million, of the purchase price on completion through £7.8 million in cash and £3.1 million in fully paid ordinary shares in PSC Insurance. The price for the issued shares will be determined at the time of completion.

The remaining 30% of the purchase price will be paid out in two tranches, with 15% to be paid in cash in the first year and 15% in the second year. The final tranche will be subject to an upward or downward adjustment based on the difference between the EBITDA figure in the second year and the estimated EBITDA figure at completion.

For Abaco Insurance, the company agreed to pay £21.0 million, excluding net assets, also in three tranches. PSC Insurance will pay 70%, or £14.7 million, of the acquisition price in the form of about £10.3 million in cash and roughly £4.4 million in fully paid ordinary shares. The price of the issued shares will be determined at the time of issuance.

In the first year, the company will pay 10% of the price in cash, approximately £1.5 million and roughly £600,000 in shares. This tranche will be subject to an upward or downward adjustment based on the first year's EBITDA. In the second year, PSC Insurance will pay 20% of the purchase price in cash, about £3 million and £1.2 million in shares, subject to an upward or downward adjustment based on the second year EBITDA.

The acquisitions, which are subject to approval by the U.K. Financial Conduct Authority, are expected to generate a combined incremental annual EBITDA of roughly £4.0 million, or about A$7.2 million, for PSC Insurance.