Wells Fargo Insurance Services, a part of Wells Fargo & Company (WFC), has purchased Fort Lauderdale, Florida-based employee benefits consulting firm Edify LLC.
The deal closed on July 1, 2011 on undisclosed terms.
The acquisition of Edify is expected to augment Wells Fargo’s growing employee benefits business. Founded in 1996, Edify offers employee benefit programs and customized health and wellness consulting for middle-market and large employers aimed at improving health and reducing cost of health care.
Per the deal, CEO and principal of Edify, Howard Gruverman, and president and principal of Edify, Carlos Castresana, along with their team will join Wells Fargo Insurance Services and offer services to clients at their current locations.
The Edify deal would bolster Wells Fargo’s increasing presence in Florida and support its top-line improvement. One of the largest insurance brokerages in the world and the largest bank-owned insurance brokerage in the U. S., Wells Fargo Insurance Services offers its services through more than 200 offices in 37 states and 7,000 insurance professionals.
Recent Acquisition
Recently, Wells Fargo also completed the acquisition of its strategic partner, Castle Pines Capital. The buyout was a part of Wells Fargo’s effort to expand its business and add channel financing capabilities.
Castle Pines Capital offers channel financing solutions to resellers in the technology sector worldwide. It became a client of Wells Fargo Capital Finance’s Lender Finance segment in 2005. Later in 2007, Wells Fargo advanced its strategic tie ups with the company by acquiring a minority equity investment in Castle Pines Capital.
In May, Wells Fargo announced that in order to carry out the acquisition process, Wells Fargo Bank NA has entered into a definitive agreement to take over the remaining equity interest in CP Equity LLC, the lone owner of Castle Pines Capital LLC and its affiliates.
Terms of the deal were not disclosed and the transaction was completed last Friday. Castle Pines Capital’s financial advisor was Morgan Stanley (MS) while its legal advisor was Bryan Cave LLP.
Our Take
Strategic acquisitions have been part of Wells Fargo’s endeavor to strengthen its business model, expand its capabilities and diversify its footprint. This has been the driving force behind its growth in recent years.
With cross-selling as its key strength, Wells Fargo’s diverse geographic and business mix provides a solid leverage for consistent earnings growth. Yet, top-line headwinds and regulatory issues remain our concerns.
Wells Fargo currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. We also have a Neutral recommendation on the stock.
