Key Takeaways
- • Marsh & McLennan (MMC), parent of Mercer, agreed to acquire Jardine Lloyd Thompson (JLT) for $5.6bn (£4.3bn) in cash, according to Pensions Expert.
- • The deal combines two of the largest pensions advisory businesses at a time when investment consultant market share is under intense scrutiny from the Competition and Markets Authority (CMA).
- • Mercer is one of the CMA's 'big three' firms, which together control 45 to 49 per cent of the investment consultancy market by revenue.
- • JLT's employee benefits division generated £320.2m in revenue in 2017 and is the UK's largest administrator of private sector pensions.
- • It remains unclear whether the pensions services of the two firms will merge or remain separate under the combined parent.
Summary
Marsh & McLennan, the insurance broker and consultancy that owns Mercer, has announced it will buy Jardine Lloyd Thompson for $5.6bn (£4.3bn) in cash, according to Pensions Expert. The transaction brings together two of the largest pensions advisory businesses in the UK, a development that comes as the market share of investment consultants and fiduciary managers faces close regulatory attention.
Mercer is one of the so-called 'big three' consultancies which, according to a recent investigation by the Competition and Markets Authority (CMA), together control between 45 and 49 per cent of the investment consultancy market by revenue. JLT sits in the CMA's anonymised second tier of consulting businesses, where the largest firm holds 8 per cent of revenues. JLT's employee benefits division generated £320.2m in revenue in 2017, and the firm is the UK's largest administrator of private sector pensions.
The CMA concluded that the investment consultancy market was not highly concentrated: no company held more than 20 per cent share, and the three largest controlled less than 50 per cent. Pensions Expert notes it is not yet clear whether the acquisition will alter that assessment. It is also unknown whether the pensions services of the two companies will be merged or kept as separate entities under a single parent group.
Dominic Burke, group chief executive of JLT, said in a statement: "I am enormously proud of what JLT has achieved, founded on our people, our culture and our unwavering commitment to our clients. MMC is, and always has been, one of our most respected competitors and I believe that, combined, we will create a group that will truly stand as a beacon for our industry."
In a separate transaction, listed pensions consultancy XPS Pensions agreed to buy the assets of public sector administration provider Kier Pensions Unit for £3.5m.
Mercer is one of the so-called 'big three' consultancies which, according to a recent investigation by the Competition and Markets Authority (CMA), together control between 45 and 49 per cent of the investment consultancy market by revenue. JLT sits in the CMA's anonymised second tier of consulting businesses, where the largest firm holds 8 per cent of revenues. JLT's employee benefits division generated £320.2m in revenue in 2017, and the firm is the UK's largest administrator of private sector pensions.
The CMA concluded that the investment consultancy market was not highly concentrated: no company held more than 20 per cent share, and the three largest controlled less than 50 per cent. Pensions Expert notes it is not yet clear whether the acquisition will alter that assessment. It is also unknown whether the pensions services of the two companies will be merged or kept as separate entities under a single parent group.
Dominic Burke, group chief executive of JLT, said in a statement: "I am enormously proud of what JLT has achieved, founded on our people, our culture and our unwavering commitment to our clients. MMC is, and always has been, one of our most respected competitors and I believe that, combined, we will create a group that will truly stand as a beacon for our industry."
In a separate transaction, listed pensions consultancy XPS Pensions agreed to buy the assets of public sector administration provider Kier Pensions Unit for £3.5m.
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