Exhibit 99.1
News Release
MARSH & McLENNAN COMPANIES TO ACQUIRE KROLL INC.
$1.9 Billion Transaction Enhances MMC's Position
as World's Leading Provider of Risk Services
NEW YORK, NEW YORK, May 18, 2004-Marsh & McLennan Companies, Inc. (MMC) and
Kroll Inc. announced today that MMC will acquire Kroll, the world's leading risk
mitigation services firm. The transaction will broaden significantly the range
of MMC's risk and insurance services businesses and enhance its leadership
position in risk management services.
Under the definitive agreement, signed today, MMC will acquire Kroll in an
all-cash $1.9 billion transaction in which Kroll shareholders will receive $37
for each outstanding share of Kroll common stock they own. The price to be paid
by MMC represents a 31.7 percent premium over Kroll's closing stock price of
$28.10 on the Nasdaq National Market on May 18, 2004.
Jeffrey W. Greenberg, chairman and chief executive officer of MMC, said: "Our
clients face a growing number of risks that are increasing in complexity and
severity. We deliver risk services to respond to a wide spectrum of client
needs, from advisory services to claims management, with the goal of helping
clients to reduce their total cost of risk. The addition of Kroll will broaden
and deepen the capabilities of our fast-growing risk consulting and advisory
businesses by adding services which clients need to reduce the impact of an
adverse event. Kroll has multiple high-growth businesses under a strong brand.
It expands our capacity in several
2
important sectors that complement our existing businesses, such as corporate
restructuring, business intelligence and investigations, security services,
employee screening, and electronic evidence and litigation support.
"This transaction is particularly attractive because we will be adding to our
team some of the world's best risk experts, including Jules Kroll, founder and
executive chairman of Kroll, and Michael Cherkasky, chief executive officer of
Kroll. Kroll's business relationships around the world fit well with ours, will
help us serve clients better, and will accelerate our revenue and earnings
growth to increase value to shareholders."
Mr. Kroll said: "In joining MMC, we become part of the industry leader in risk
management, a company with a great management team, a history and culture of
outstanding client service and a great future. We look forward to working with
Jeff Greenberg and his colleagues and to delivering the benefits of this
exciting transaction to our clients."
Mr. Cherkasky said: "This transaction is another example of our commitment to
maximizing shareholder value and is a winning proposition for our clients and
employees alike. Our mission as the premier global risk mitigation firm remains
the same. But by combining the world-class risk services practices of MMC and
Kroll, we will offer a compelling range of services that will enable us to
attract and serve more clients in more ways."
The combination of MMC and Kroll will produce a number of important benefits for
clients, including the following:
o Ability to Match Service Offerings to Client Needs: The acquisition of
Kroll will enable Marsh to offer risk clients a combination of services
which can be deployed in a way that provides unique benefits in mitigating
the complexity and severity of risk. Marsh is distinguished for its
advice to clients on operational risk, workplace risk, enterprise risk,
and claims management. Kroll has professional expertise and a market
leadership position in
3
corporate restructuring, forensic accounting, business investigations, and
electronic discovery.
o Expanded Processing Services: The acquisition of Kroll not only increases
Marsh's risk processing services capability, specifically to provide
clients employee-screening, vendor-screening, and credit-screening
services, but also provides the foundation for further expansion in
processing.
o Global Reach: Like Marsh, Kroll has a global client base with a strong
presence in Europe that strengthens the Marsh global risk consulting
platform. Although Marsh and Kroll have clients in common, they have
different sets of executive relationships that both firms can use to
provide additional services to clients.
Completion of the transaction is expected to occur in the third quarter of 2004.
MMC believes that cost savings and the additional revenues resulting from the
combination of the two businesses will make the transaction accretive in 2005.
The transaction was unanimously approved by both MMC's and Kroll's boards of
directors. Kroll's board recommends that Kroll shareholders vote in favor of the
transaction at a shareholder meeting that will be scheduled as soon as
practicable. Mr. Kroll, who owns 7.3 percent of Kroll's shares, Mr. Cherkasky,
and eight other members of Kroll's senior management have committed to vote
their shares in favor of the transaction.
Upon completion of the transaction, Kroll will become part of Marsh Inc., MMC's
risk and insurance services subsidiary. Marsh Risk Consulting and Kroll will be
combined under Mr. Cherkasky's leadership. Mr. Kroll will be named a vice
chairman of Marsh Inc.
Completion of the transaction is subject to the expiration or early termination
of the applicable Hart-Scott-Rodino waiting periods and to Kroll shareholder
approval.
MMC's financial advisor for the transaction was Greenhill & Co., LLC. Kroll's
financial advisors for the transaction were Goldman Sachs & Co. and Morgan
Joseph & Co. Inc.
4
Messrs. Greenberg, Cherkasky, and Kroll, MMC chief financial officer Sandra
Wijnberg, and Ray Groves and Roger Egan, chairman and president of Marsh Inc.,
respectively, along with Donald Birdsong, head of Marsh Risk Consulting, will
discuss today's announcement via teleconference and live audio webcast at 8:30
a.m. (EDT) on Wednesday, May 19. To participate in the audio webcast (which will
be listen-only), as well as to view additional information about the
transaction, go to www.mmc.com. A replay of the webcast will be made available.
A continuous telephone replay will be available beginning Wednesday, May 19 at
1:00 p.m. (EDT) and continuing through midnight (EDT) Wednesday, June 2. To
listen to the replay, please dial (888) 203-1112. Callers from outside the
United States may listen to the replay by dialing (719) 457-0820. The access
code for both numbers is 647531.
About Kroll Inc.
- ----------------
Kroll Inc. (Nasdaq: KROL), the world's leading independent risk consulting
company, provides a broad range of investigative, intelligence, financial,
security, and technology services to help clients reduce risks, solve problems,
and capitalize on opportunities. Headquartered in New York with more than 60
offices on six continents, Kroll has a multidisciplinary corps of more than
3,200 employees and serves a global clientele of law firms, financial
institutions, corporations, non-profit institutions, government agencies, and
individuals. For more information, please visit: www.krollworldwide.com.
Kroll has four primary business segments: Consulting Services, Corporate
Advisory and Restructuring Services, Background Screening Services, and
Technology Services. For the year ended December 31, 2003, Kroll reported net
sales of $485.5 million, and income from continuing operations, after
restructuring charges, of $46.2 million. For first quarter 2004 net sales were
$165.3 million, a 60 percent increase from first quarter 2003.
5
About MMC
- ---------
MMC is a global professional services firm with annual revenues exceeding $11
billion. It is the parent company of Marsh Inc., the world's leading risk and
insurance services firm; Putnam Investments, one of the largest investment
management companies in the United States; and Mercer Inc., a major global
provider of consulting services. More than 60,000 employees provide analysis,
advice, and transactional capabilities to clients in over 100 countries. Its
stock (ticker symbol: MMC) is listed on the New York, Chicago, Pacific, and
London stock exchanges. MMC's website address is www.mmc.com.
In 2003, revenues from MMC's risk and insurance services businesses totaled $6.9
billion. Marsh Inc., MMC's largest business measured by both revenues and
earnings, is the world leader in delivering risk and insurance services and
solutions to clients. It has approximately 38,000 employees, more than 400
offices, and serves clients in more than 100 countries.
This press release contains certain statements relating to future results, which
are forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such statements may include, without limitation,
discussions concerning revenues, expenses, earnings, cash flow, capital
structure, pension funding, and the adverse consequences arising from
market-timing issues at Putnam, including fines and restitution, as well as
market and industry conditions, premium rates, financial markets, interest
rates, foreign exchange rates, contingencies, and matters relating to MMC's
operations and income taxes. Such forward-looking statements are based on
available current market and industry materials, experts' reports and opinions,
and long-term trends, as well as management's expectations concerning future
events impacting MMC. Forward-looking statements by their very nature involve
risks and uncertainties. Factors that may cause actual results to differ
materially from those contemplated by any forward-looking statements contained
herein include, in the case of MMC's risk and insurance services business,
changes in competitive conditions, movements in premium rate levels, the
conditions for the transfer of commercial risk and other changes in the global
property and casualty insurance markets, natural catastrophes, mergers between
client organizations, and insurance or reinsurance company insolvencies. Factors
to be considered in the case of MMC's investment management business include
changes in worldwide and national equity and fixed income markets, actual and
relative investment performance, the level of sales and redemptions, and the
ability to maintain investment management and administrative fees at historic
levels; and with respect to all of MMC's activities, changes in general
worldwide and national economic conditions, the impact of terrorist attacks,
changes in the value of investments made in individual companies and investment
funds, fluctuations in foreign currencies, actions of competitors or regulators,
changes in interest rates or in the ability to access financial markets,
developments relating to claims, lawsuits and contingencies, prospective and
retrospective changes in the tax or accounting treatment of MMC's operations,
and the impact of tax and other legislation and regulation in the jurisdictions
in which MMC operates. In addition, there are risks and uncertainties relating
to MMC's ability to integrate Kroll's business successfully and realize expected
synergies; the continued strength of Kroll's relationships with its employees,
suppliers, and customers; and the accuracy of the basis for the forecasts
relating to Kroll's business.
Forward-looking statements speak only as of the date on which they are made, and
MMC undertakes no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which it is made or to reflect the
occurrence of unanticipated events. Please refer to Marsh & McLennan Companies'
2003 Annual Report
6
on Form 10-K for "Information Concerning Forward-Looking Statements," its
reports on Form 8-K, and quarterly reports on Form 10-Q.
MMC is committed to providing timely and materially accurate information to the
investing public, consistent with our legal and regulatory obligations. To that
end, MMC and its operating companies use their websites to convey meaningful
information about their businesses, including the anticipated release of
quarterly financial results and the posting of updates of assets under
management at Putnam. Monthly updates of total assets under management at Putnam
will be posted to the MMC website the first business day following the end of
each month. Putnam posts mutual fund and performance data to its website
regularly. Assets for most Putnam retail mutual funds are posted approximately
two weeks after each month-end. Mutual fund net asset value (NAV) is posted
daily. Historical performance and Lipper rankings are also provided. Investors
can link to MMC and its operating company websites through www.mmc.com.
###