Marsh to Buy Kroll to Expand Operation Consulting on Risk

Marsh & McLennan Cos., the world’s No. 1 insurance broker, said Tuesday that it had agreed to acquire Kroll Inc. for $1.9 billion in cash, expanding Marsh’s risk consulting and advisory business.

The deal would broaden Marsh’s corporate risk capabilities at a time when such services are increasingly in demand. Kroll provides a variety of corporate risk consultancy services ranging from employee background checks to fraud investigations and has seen client demand soar in recent quarters.

“Our clients face a growing number of risks that are increasing in complexity and severity,” said Jeffrey Greenberg, Marsh’s chairman and chief executive.

The deal “expands our capacity in several important sectors that complement our existing businesses, such as corporate restructuring, business intelligence and investigations, security services ... and electronic evidence and litigation support,” Greenberg said.

Terms of the transaction call for Marsh, based in New York, to pay $37 a share for Kroll. That represents a nearly 32% increase over the company’s closing price of $28.10 on Nasdaq on Tuesday. Marsh closed Tuesday at $42.74, up 15 cents.

Kroll jumped 30% to $36.51 in after-hours trading on Instinet; Marsh fell slightly to $42.10.

The acquisition comes as Marsh, traditionally a low-profile company, works to move past a variety of regulatory investigations that kept the company in an unwelcome media spotlight for several months.

Its money management unit, Putnam Investments, was the first firm to be charged in the fund trading scandal, ultimately paying a $110-million fine. Last month Marsh was dragged into New York Atty. Gen. Eliot Spitzer’s insurance industry probe.