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Marsh & McLennan Agrees to Buy Kroll

May 19, 2004

NEW YORK (AP) _ Marsh & McLennan Cos. is buying security consultant Kroll Inc. for $1.9 billion in cash, folding it into a portfolio that already includes insurance, financial management and business consulting, the firms announced Tuesday.

The deal calls for owners of Kroll stock to be paid $37 per share, and is expected to be finalized in the third quarter of this year.

``The addition of Kroll will broaden and deepen the capabilities of our fast-growing consulting and advisory businesses by adding services which clients need to reduce the impact of an adverse event,″ Jeffrey W. Greenberg, MMC’s chairman and CEO, said in a statement.

MMC’s offer, announced after the close of trading, represents a nearly 32 percent premium in the price of Kroll’s stock. The shares, which trade on the Nasdaq Stock Market, finished Tuesday at $28.10, up 16 cents. They soared nearly 30 percent, or $8.40, in after-hours trading.

MMC, which trades on the New York Stock Exchange, closed Tuesday at $42.74, up 15 cents. Marsh lost 74 cents in the extended session.

Kroll will become part of Marsh Inc., the insurance subsidiary of MMC. The security firm’s CEO, Michael Cherkasky, will lead a unit to include Kroll and Marsh’s risk consulting business.

Kroll’s founder, Jules Kroll, will become a vice chairman of New York-based Marsh Inc.

Kroll, which reported net income last year of $46.2 million on sales of $485.5 million, provides security consulting, investigation, background screening and business restructuring services.

Besides Marsh Inc., MMC also owns Putnam Investments and the Mercer Inc. consulting business.


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