Arthur J Gallagher & Co. (AJG) announced that it has priced an offering of 19 million shares of its common stock at a price of $43.25 per share. Additionally, it also declared that the underwriters may purchase an additional 2.85 million shares of its common stock within a 30-day option.
The offering is expected to close on April 16, 2014, subject to conditions.
Arthur J Gallagher & Co. intends to use the net proceeds from the offering to fund a part of its acquisition of Wesfarmers insurance brokerage operations. The remaining proceeds will be used to repay the borrowings under the company’s line of credit as well as for general corporate purposes, including other acquisitions.
As of 2013, total number of shares outstanding for Arthur J Gallagher & Co. was 135.8 million. With this issuance the share count will rise to approximately 155 million, weighing on the earnings per share of the company.
Arthur J Gallagher reported first-quarter 2014 operating net earnings of 39 cents a share that outperformed the Zacks Consensus Estimate by 52%. The also result increased from the prior-year quarter number by 22%. The Zacks Consensus Estimate for 2014 is currently pegged at $2.41 per share. However, this number may be revised downward as analysts incorporate the new issuance in their model.
Additionally, Arthur J Gallagher & Co. carries a Zacks Rank #3 (Hold) and its Earnings ESP is positive, indicating the stock is likely to deliver a positive earnings surprise in the second quarter of 2014.
Other Stocks to Consider
Some top-ranked stocks worth mentioning in the insurance space include ACE Ltd (ACE), Erie Indemnity Co. (ERIE), Marsh & McLennan Companies, Inc. (MMC). While ACE Limited sports a Zacks Rank #1 (Strong Buy), Erie Indemnity and Marsh & McLennan both carry a Zacks Rank #2 (Buy).
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