Marsh & McLennan To Acquire Sedgwick Group

N/A McLennan Companies, Inc. has reached an agreement to acquire the entire issued share capital of <%=company%> for a total cash consideration of £1.25 billion (approximately $2 billion). The acquisition of Sedgwick, the largest European-based independent insurance broker, will enhance Marsh & McLennan Companies' position as one of the world's leading providers of professional services, particularly in its risk and insurance services and consulting businesses.

"We believe the combination of Marsh & McLennan Companies and Sedgwick will be beneficial for our clients, employees and shareholders," said A. J. C. Smith, chairman and chief executive officer of Marsh & McLennan Companies. "This transaction, which joins together two of the best-known names in risk and insurance services and consulting, will strengthen further our ability to meet the increasing global demand for professional services. In particular, it will enable us to improve the breadth and quality of service to our clients while providing substantial operational efficiencies."

Under the terms of the offer, which was approved by the boards of directors of both companies, Marsh & McLennan Companies will pay 225 pence for each Sedgwick share and £11.25 (approximately $18.34 at £1:$1.63) for each Sedgwick ADS.

J. P. Morgan and Donaldson, Lufkin & Jenrette are serving as financial advisors to Marsh & McLennan Companies, and NM Rothschild & Sons Limited and Credit Suisse First Boston are serving as financial advisors to Sedgwick. The offer is subject to customary regulatory approvals and other conditions, and it is anticipated that the transaction will close in the fourth quarter. N/A McLennan Companies said it expects the acquisition to be accretive to its earnings per share, beginning in the year 2000. The directors of Sedgwick and certain other persons have irrevocably undertaken to accept the offer in respect of their holdings of Sedgwick shares, amounting in aggregate to approximately 225.7 million Sedgwick shares, representing approximately 41 percent of Sedgwick's issued share capital.

"From a strategic standpoint, we believe this transaction will enhance shareholder value through a combination of stronger insurance broking practices, global reach and operating efficiencies," said Smith. "The addition of Sedgwick will increase our presence in the United Kingdom and in continental Europe and Asia, where the Sedgwick brand name is recognized and respected. With the addition of Sedgwick's excellent professional staff, we will be able to respond more effectively to the increasingly complex risks our clients encounter and be able to compete successfully with all potential competitors in our market.

"We are also very excited about the opportunity to combine Sedgwick's consulting business, which is a leading employee benefits consulting firm, with our own consulting firm, which we expect will provide growth opportunities," Smith concluded.

Sax Riley, chairman of Sedgwick, said, "I am delighted that Sedgwick and Marsh & McLennan Companies have come together to form the world's leading insurance broker and employee benefits consultancy, and I look forward to working with Marsh & McLennan Companies for the development of our business. The combination of our two groups, together with the retention of the Sedgwick brand name internationally, will enhance our global service and will offer our people new opportunities in a much enlarged group."

Riley and Rob White-Cooper, chief executive officer of Sedgwick, have been invited to join the board of Marsh & McLennan Companies upon closing.