Marsh & McLennan Sells Kroll to Providence for $1.13B

By Steve Eder | June 7, 2010

Marsh & McLennan Cos Inc agreed to sell investigations unit Kroll to a firm led by former Marsh CEO Michael Cherkasky for less than the insurance broker paid for Kroll six years ago.

MMC said on Monday it plans to sell Kroll — a corporate sleuth and intelligence expert that has expanded into risk management and other areas — to Altegrity in a $1.13 billion all-cash deal. MMC bought Kroll in 2004 for $1.9 billion.

Altegrity is backed by private equity firm Providence Equity Partners.

Kroll, put up for sale by the No. 2 global insurance broker, attracted interest from a number of private equity firms.

The deal means that Cherkasky, chief executive of Altegrity, will be reunited with Kroll, which he led from 2001 to 2004. Cherkasky was ousted as MMC CEO in late 2007 after producing disappointing results.

MMC shares were up 19 cents to $21.18 in morning trading on the New York Stock Exchange.

Cherkasky took over MMC in 2004 in the middle of a bid-rigging scandal in which the company faced charges from then-New York Attorney General Eliot Spitzer. Cherkasky, a friend of Spitzer, worked with him in the Manhattan district attorney’s office.

Cherkasky joined Altegrity in 2008. In 2009 he hired former Los Angeles Police Chief William Bratton to lead Altegrity’s security consulting unit.

After Altegrity acquires Kroll, the companies will have a combined 11,000 employees. The deal is expect to close by late September.

The Financial Times reported in March that MMC was seeking $1.3 billion for Kroll.

MMC said Goldman Sachs Group Inc and Apollo Investment Corp are providing debt financing for the transaction.

Jules Kroll, who founded the firm in 1972, is in the process of starting a credit rating agency aimed at competing with Moody’s Corp and McGraw-Hill Cos Inc’s Standard & Poor’s.