JLT set to pay £130m for Heath Lambert

Jardine Lloyd Thompson confirmed yesterday it was in talks to buy its rival insurance broker Heath Lambert. No price was disclosed, but JLT is believed to be poised to pay about £130m within weeks.

Industry experts at the investment bank Morgan Stanley calculate that a takeover by JLT would see up to 400 jobs go, or one in 10 of the combined group's UK workforce.

Meanwhile, the three top Heath Lambert men instrumental in brokering the deal stand to make millions in cash, shares and pension benefits.

Adrian Colosso, the chief executive since March last year, Mike Bruce, the managing director, and Keith Hamill, the non-executive chairman, will net about £5m in cash and shares between them under the terms of the deal.

JLT said it would not need to raise any money to fund such an acquisition and that it would make a further statement as and when appropriate. The shares rose 6.5p to 407p, valuing JLT at £864m.

The past difficulties of JLT and Heath Lambert have been well documented. In late 2004, JLT warned on profits and announced the departure of Steve McGill, its chief executive. Dominic Burke replaced him, and in March unveiled a strategic review that opened the door to bolt-on acquisitions.

In 2003, Heath Lambert's planned flotation fell through, prompting a change of management, disposals and a restructuring of its finances.

A year ago, it restructured again to leave a company worth about £50m with about £100m of loan notes, preference shares and debt.

That latest restructuring - led by Royal Bank of Scotland and Credit Suisse - saw the Pension Protection Fund (PPF) secure 10 per cent of the company's shares in return for bailing out the Heath Lambert pension scheme. The final-salary scheme, £210m in debt at the time, was closed. All pension assets are still controlled by trustees but are likely to be transferred to the PPF in the future.