On Jan 16, Associated Banc-Corp (ASB) announced the acquisition of Ahmann & Martin Co., a MN-based leading risk and benefits consulting firm. The transaction is approximately valued at $48 million.
As per the deal, Ahmann & Martin will be merged with and into Associated Financial Group, a subsidiary of Associated Banc-Corp. Moreover, key executives of the former will assume important positions in the merged entity. Dean Hildebrandt, CEO of Ahmann & Martin Co., will become the president and CEO; while David Martin, benefits principal of Ahmann & Martin, will assume the role of executive vice president (“EVP”), following the acquisition.
Ahmann, Martin and Hildebrandt will join Associated Financial Group’s board of directors. William M. Bohn, EVP of the acquirer, will serve as the chairman of the new company.
The newly formed company will have more than 370 employees and a client base of nearly 14,000. The merged entity is expected to rank among the top 50 insurance brokers across the U.S., based on 2013 pro forma revenues.
The transaction value is, however, subjected to an increase of $8 million, if any contingencies are met over a defined period. The acquisition is expected to close next month.
Associated Banc-Corp, which is slated to release fourth-quarter and full-year earnings on Jan 22, 2015, is not expected to materially benefit from the acquisition in the next two years. However, the merger is expected to be accretive to the company’s earnings in 2017.
Associated Financial Group, which serves the states of Wisconsin, Minnesota and Illinois, seeks to penetrate further into the Wisconsin market with this acquisition. The company also expects to benefit from Ahmann & Martin’s range of specialized industry-specific solutions. From the clients’ perspective, the new entity would provide them with the benefits of centralized management.
Associated Banc-Corp remains well capitalized. It has always been focused on deploying capital through share repurchase. The acquisition comes as a surprise, as the company is not very active with mergers and acquisitions. The last acquisition closed was that of First National Bank of Hudson in Jun 2007.
Since mounting expenses continue to trouble the company, such acquisition activity can add to the woes. Moreover, enhancing footprints in the already tapped Wisconsin market can increase the existing concentration risk, which can adversely affect the company’s financial performance if the regional economy starts faltering. Plus, the long period of time, before the deal can be accretive to earnings, makes the transaction dull.
However, the fresh acquisition might be an indicator of an increase in the company’s M&A activity in the upcoming quarters, which is expected to boost future growth.
Associated Banc-Corp currently carries a Zacks Rank #3 (Hold). Some better-ranked Midwest banks include QCR Holdings Inc. (QCRH), sporting a Zacks Rank #1 (Strong Buy), Enterprise Financial Services Corp. (EFSC) and First Merchants Corp. (FRME) – both carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment