Consolidating its position in South America, Marsh & McLennan Companies Inc.’s (MMC) globally leading consulting wing by market value, Mercer, announced the acquisition of Chile-based compensation and benefits survey and information products consulting firm – Denarius. However, the terms and value of the deal remain undisclosed.
Meanwhile, the market had a positive response to the deal as the shares of Marsh & McLennan witnessed a rise of about 1.1% in the last two trading sessions, following the news.
Armed with a strong database of over 600 company clients, along with an array of 14 diversified products, Denarius leads Chile’s financial outsourcing services’ market offering compensation data and information on competitive market rates. Mercer’s longstanding global recognition will effectively boost Denarius’ competencies and clientele.
On the other hand, the deal complements Mercer’s already strong consulting and people management services. Together, the firms can cater to the Chilean organizations and provide a sturdy platform that enables talent acquisition and retention, which is presently a key issue for such companies. Hence, the deal appears productive, scope-driven and potent enough to benefit from the economies of scale, going forward.
Over the past years, Marsh & McLennan has been expanding its size and operations through inorganic growth strategy. While its brokerage wing (Marsh) has more than 46 acquisitions in its kitty since late 2009, Mercer has made four meaningful mergers since 2012.
Conversely, Marsh & McLennan remains financially sound, further eliminating any significant risk on leverage. The company maintains low capital requirement despite its investments in acquisitions. We believe that such strategic acquisitions are crucial for new business production and client retention, thereby strengthening its competitive edge in the peer group.
Currently, Marsh & McLennan carries a Zacks Rank #2 (Buy). Investors interested in the financial sector could consider equally well-ranked stocks like Aon Plc (AON), Amerisafe Inc. (AMSF) and Radian Group Inc. (RDN).
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