Marsh & McLennan Companies, Inc. (NYSE:MMC) announced today the issuance of $7.25 billion in senior notes, spanning various maturities and interest rates, in a transaction facilitated by a group of major underwriters. The financial services firm's move to secure capital comes amidst a dynamic market environment.
The New York-based global professional services firm specializing in insurance brokerage and risk management entered into an underwriting agreement on October 30, 2024, with Citigroup (NYSE:C) Global Markets Inc., BofA Securities, Inc., Deutsche Bank (ETR:DBKGn) Securities Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, and Wells Fargo (NYSE:WFC) Securities, LLC. These underwriters have agreed to purchase a mix of fixed and floating rate senior notes with maturities ranging from 2027 to 2055.
The offering includes $950 million of 4.550% senior notes due in 2027, $1 billion of 4.650% senior notes due in 2030, $1 billion of 4.850% senior notes due in 2031, $2 billion of 5.000% senior notes due in 2035, $500 million of 5.350% senior notes due in 2044, $1.5 billion of 5.400% senior notes due in 2055, and $300 million of floating rate senior notes also due in 2027.
The notes were issued under the company's existing shelf registration statement and were offered via a prospectus dated July 24, 2024, supplemented by a prospectus supplement dated October 30, 2024. The issuance was finalized on today's date, November 8, 2024, under an agreement with The Bank of New York Mellon (NYSE:BK), which serves as the trustee.
Marsh & McLennan's latest capital raise is documented in the Nineteenth Supplemental Indenture, dated today, and the forms of the individual notes are detailed in the exhibits attached to the SEC filing. Additionally, the company has entered into a calculation agency agreement with The Bank of New York Mellon concerning the floating rate notes.
In other recent news, Marsh & McLennan has experienced significant developments. The company reported a 5% rise in underlying revenue and a 12% increase in adjusted operating income for Q3 2024. Marsh & McLennan's adjusted EPS was $1.63, marking a 4% increase year-over-year, and consolidated revenue was reported at $5.7 billion.
In a major expansion move, Marsh & McLennan acquired McGriff Insurance Services for $7.75 billion, a deal expected to close by the end of the year. This acquisition is anticipated to be modestly accretive to the adjusted EPS in its first year.
Keefe, Bruyette & Woods, BMO Capital Markets, RBC Capital, and Goldman Sachs have all updated their price targets and ratings for Marsh & McLennan. Keefe, Bruyette & Woods raised its price target to $212.00, BMO Capital Markets to $228.00, and RBC Capital to $242.00, while Goldman Sachs maintained its price target at $220.00. All four firms have updated their earnings per share estimates for the company, reflecting their analysis of the company's recent performance and future prospects.
InvestingPro Insights
Marsh & McLennan's recent $7.25 billion senior notes issuance aligns with its strong financial position and market standing. According to InvestingPro data, the company boasts a substantial market capitalization of $110.67 billion, underscoring its significant presence in the insurance industry.
InvestingPro Tips highlight MMC's financial stability and shareholder-friendly policies. The company has maintained dividend payments for an impressive 54 consecutive years and has raised its dividend for 15 consecutive years. This consistent dividend growth, coupled with a current dividend yield of 1.46%, may appeal to income-focused investors considering the new debt issuance.
Moreover, MMC's profitability is noteworthy, with a gross profit of $10.83 billion and an operating income margin of 27.21% over the last twelve months. These strong financials likely contribute to the company's ability to secure favorable terms for its new debt offering.
For investors seeking a deeper understanding of Marsh & McLennan's financial health and prospects, InvestingPro offers 12 additional tips, providing a comprehensive analysis to inform investment decisions.
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