Marsh Buys Kroll For $1.9 Billion

NU Online News Service, May 18, 5:30 p.m. EST?-Marsh & McLennan Companies Inc. and Kroll Inc. announced today that MMC will acquire Kroll, a leading risk mitigation services firm.[@@]

Under the definitive agreement, signed today, MMC will acquire Kroll in an all-cash $1.9 billion transaction in which Kroll shareholders will receive $37 for each outstanding share of Kroll common stock they own. The price to be paid by MMC represents a 31.7 percent premium over Kroll's closing stock price of $28.10 on the Nasdaq National Market on May 18.

Completion of the transaction is expected to occur in the third quarter of 2004. MMC believes that cost savings and the additional revenues resulting from the combination of the two businesses will make the transaction accretive in 2005.

"Our clients face a growing number of risks that are increasing in complexity and severity," said Jeffrey W. Greenberg, chairman and chief executive officer of New York-based MMC. "The addition of Kroll will broaden and deepen the capabilities of our fast-growing risk consulting and advisory businesses by adding services which clients need to reduce the impact of an adverse event."

He added that the acquisition of Kroll "expands our capacity in several important sectors that complement our existing businesses, such as corporate restructuring, business intelligence and investigations, security services, employee screening, and electronic evidence and litigation support."

Mr. Greenberg said that "Kroll's business relationships around the world fit well with ours, will help us serve clients better, and will accelerate our revenue and earnings growth to increase value to shareholders."

Jules Kroll, founder and executive chairman of the firm being acquired, said that "in joining MMC, we become part of the industry leader in risk management, a company with a great management team, a history and culture of outstanding client service, and a great future. We look forward to working with Jeff Greenberg and his colleagues and to delivering the benefits of this exciting transaction to our clients."

The transaction was unanimously approved by the boards of both companies. Kroll's board recommends that Kroll shareholders vote in favor of the transaction at a shareholder meeting that will be scheduled as soon as practicable. Mr. Kroll, who owns 7.3 percent of Kroll's shares, Mr. Cherkasky, and eight other members of Kroll's senior management have committed to vote their shares in favor of the transaction.

Upon completion of the transaction, Kroll will become part of Marsh Inc., MMC's risk and insurance services subsidiary. Marsh Risk Consulting and Kroll will be combined under Mr. Cherkasky's leadership. Mr. Kroll will be named a vice chairman of Marsh Inc.