Morgan Stanley Maintains on Brown & Brown Following Purchase of Wright Insurance Group for $602M

In a report published Friday, Morgan Stanley analyst Kai Pan maintained Equal-weight on Brown & Brown (NYSE: BRO), following the company's move to acquire Wright Insurance Group for $602.5M.

According to the report, BRO's move to acquire Wright Insurance Group for expects 9-10c EPS accretion. This is the company's third large deal since Dec. 2011.

“When completed Wright will be the largest deal in BRO's history & gives them a substantial presence in the national flood insurance program (NFIP) with 2013 net adjusted revenue of ~$114m and ~$54m EBITDA,” the report noted. “The valuation of 5.3x revenue and 11.2x EBITDA is well above what BRO typically pays for smaller deals but only slightly above the larger recent acquisitions of Beecher Carlson (3.3x Rev & 11X EBITDA) and Arrowhead (3.8x Rev & 10x EBITDA). Wright adds ~9% to BRO's $1.37b revenue base and is expected to be 9-10c accretive to earnings.”

BRO closed Thursday at $32.20.