Cadence Bank announces $904m sale of Cadence Insurance to Gallagher

Cadence Bank (NYSE: CADE) has unveiled a definitive pact to divest its insurance unit, Cadence Insurance, Inc., to Arthur J. Gallagher & Co. (Gallagher) (NYSE: AJG) in a $904 million cash transaction.

Reinvestment and Core Banking Focus

The disposal of Cadence Insurance, celebrated as the nation’s second-largest bank-affiliated insurance broker by Business Insurance, unlocks opportunities for Cadence. It aims to leverage the valuation premium and channel the capital towards strategic revamps and reinforcing its primary banking franchise. Financial pundits observe the transaction’s allure with a striking 5.4x LTM revenue for a bank-owned brokerage. Financial gains include a forecasted 24% boost in tangible book value per share and a 160 bps surge in CET1. An approximate after-tax capital surge of $620 million and estimated net cash proceeds of $650 million further fortify Cadence’s financial posture, paving the way for shareholder value enhancement.

Earnings Per Share and Future Growth Trajectory

The transaction is poised to inject positive momentum into earnings per share via cash proceeds application towards diminishing wholesale debts. Gradual upticks in net income and earnings per share are on the horizon as the infused capital undergoes strategic deployments.

From the Leadership’s Desk

Dan Rollins, Cadence Bank’s Chairman & CEO, expressed his sentiments, “Cadence Insurance’s growth journey over 24 years has been monumental. This move empowers us to prioritize our core – cultivating enduring banking bonds and actualizing our long-range strategies. Cadence Insurance’s contribution has been invaluable, and they’ll be deeply missed.”

Continuing his narrative, Rollins highlighted Gallagher’s esteemed reputation and voiced confidence in the uninterrupted premium service delivery post-acquisition.

Echoing Rollins’ sentiments, Markham McKnight, CEO of Cadence Insurance, lauded Cadence Bank’s supportive role over the years and expressed his optimism about Cadence Insurance’s upcoming chapter with Gallagher.

Post-Acquisition Transition and Closing Details

With a closing window targeting Q4 2023, the transaction’s culmination awaits conventional closing checkpoints. Post-sale, the leadership and workforce of Cadence Insurance will transition to Gallagher.

About Cadence Insurance

Specializing in diverse insurance verticals like commercial and personal property & casualty, and risk management services, Cadence Insurance stands tall with 30 offices across eight Southeastern states. Recognitions from Business Insurance, Baton Rouge Business Report, and Mississippi Business Journal underline its stellar workplace reputation.

In facilitating the transaction, Cadence availed financial consultancy from Morgan Stanley & Co. LLC, MarshBerry, and Ernst & Young, while legal expertise came from Hodgson Russ LLP.