THB/PWS saga has happy ending as PB rounds up the last week

One industry wit commented that while European markets began to panic, Denmark’s Carlsberg brewery remained comfortably in the black and that perhaps the solution was to have a drink to steady the nerves.

Second, the fact one of the world’s largest brokers is rumoured to be buying one of its biggest rivals has set many tongues wagging. Why is Willis, which is worth $5.3bn (£2.6bn), looking to buy its larger rival Marsh McLennan, which has a stock market value of around $14.3bn (£7.1bn)? More interesting is that Aon, which is largely agreed to be the biggest and most successful broker of late, appears to have no interest in acquiring Marsh. Look out for analysis of Marsh’s recent trials in February’s PB.

And if that wasn’t enough of a surprising twist for you, the ongoing saga between the THB Group and PWS Holdings collapsed and reignited in the space of nine days. On 15 January, THB Group terminated discussions with the board of PWS Holdings for the acquisition of the Lloyd’s broking business of PWS International and overseas interests of the PWS group. It was only two months prior that THB’s chief executive, Vic Thompson, said that the two businesses would “complement each other’s operations well”, but last week Thompson said that legal complexities had caused THB to withdraw its offer.

On 18 January, THB reported “disappointing results” with figures showing its profit before tax down 7% on turnover but reassured shareholders that improvements were on the way and that despite the soft market conditions, THB had not lost any key accounts and will be well-placed when capacity reduces and the market eventually turns. PWS meanwhile blamed the collapsed acquisition on the fact that THB missed crucial completion dates and concluded that the “level of ongoing uncertainty this would cause would not be in the group’s best interests”.

Then on 24 January, THB announced that the deal is back on again, with PWS Holdings expected to receive £8.5m, comprising £4.5m in cash at completion, £2m in loan notes to be issued on 1 January 2009 and a further £2m in loan notes to be issued on 1 January 2010. The legal complexities which had suspended the deal last week have now been resolved, but the final details are rather intricate. In order to secure the deal, THB Group chief executive officer Vic Thompson will 'gift' 1,150,000 of his own THB shares to little known Guilford Services. These shares will form part of the asset backing to enable Guilford Services to acquire some of PWS' existing liabilities. As a result of this transaction, Mr Thompson's holding of THB shares will be reduced to 5,400,000, representing 19.4% of the Company's issued share capital and Guilford Services Limited will hold 1,150,000 shares, representing 4.1% of issued share capital.

One story to keep your eye on over the coming weeks is the aggressive acquisition tactics which could see China’s number two insurer snapping up UK insurance giants as part of its global campaign. Reports in several broadsheets hinted Ping An Insurance is planning to raise $22bn (£11bn) which could be used to buy part of Aviva. The parent company of Norwich Union could benefit from this purchase, since it has no real presence in Asia and is still licking its wounds from the failed Prudential bid in 2007. Other commentators have suggested that Ping An may try to succeed where Aviva failed and form a partnership with Prudential, providing Ping An with a stake in the London-headquartered company.

PB Week wouldn’t be PB Week without mention of some soiree or other, so we at PB’s editorial would like to extend our thanks to the organisers of the Incisive Media Awards. A minor (lack of) wine crisis was gallantly solved by Graham Harman, the managing director of Incisive Media’s Professional Services division, which PB sits within. Several of our insurance-colleagues won prestigious awards, including PB’s sister publication Post, which won editorial team of the year.

STOP PRESS: The Institute of Insurance Brokers has announced the sudden death of Andrew Paddick, the director general of the Institute of Insurance Brokers. John Greenway, president of the Institute of Insurance Brokers, commented. “I am deeply shocked and saddened at the news of Andrew’s death. For twenty years his unique style of representing the interests of insurance brokers rightly won him many friends and plaudits from the industry and his death leaves a huge void in broker representation. We owe it to Andrew and all that he achieved to carry on fighting for broker interests in the way I know he would want.” We pass on our best wishes to Andrew’s family at this difficult time.

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