HUB: A 'small time' $1.8 billion deal

In light of the mega deal for TXU (NYSE: TXU), the buyout for Hub International Ltd (NYSE: HBG) looks almost insignificant.

The transaction price is $1.8 billion. The buyers include the private equity firm, Apax Partners Worldwide LLP and also Morgan Stanley (NYSE: MS).

Founded in 1998, Hub is an insurance broker with coverage across the spectrum (property & casualty, life, health and so on). The main focus is on North America. Since August, the stock has had a nice run, going from $25 to $39.50.

The company has been showing strength in its financials. For example, today the company announced its fiscal fourth quarter results. Net income increased from $5.7 million, or $0.17 per share to $11 million or $0.27 per share. Sales increased 20% to $136.6 million.

In fact, management certainly sees lots of potential. Key members are going to invest a minimum of $65 million in the deal.

There is a "go shop" provision in the deal that allows for competing bids (the deadline is March 19th). However, Wall Street doesn't think another bid is likely, since the current stock price is lower than the $40 bid.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.