Morneau acquires Mercer’s pension and benefits outsourcing business

Morneau Shepell Inc. has aquired Mercer Canada’s pension and benefits outsourcing business.

Morneau Shepell has gained more than 250 employees and approximately 60 clients, including some major multinational companies through this deal. These clients represent approximately $25 million in additional annual revenue to the company.

Representatives from Mercer indicated that these clients were ones that required complex platforms and support for proper management of their programs. Mercer also said that the firm is not moving away from pension and benefits administration or actuarial services; rather, the company just doesn’t have the capacity or infrastructure to meet the technological needs that these specific clients require.

“Our goal was to ensure that the clients of our outsourcing business transition to an organization with a strong track record of outsourcing experience and leading-edge technology solutions,” said Jacques Théorêt, Mercer Canada, Latin America region, regarding its selection of Morneau Shepell. “We look forward to continuing our focus on pension consulting and supporting our clients in the small pension plan third-party administration segment.”

The two companies started talks concerning this deal about four months ago, says Alan Torrie, president and CEO of Morneau Shepell. “Today’s acquisition is in line with our stated strategy to grow our business profitably through acquisitions that complement our existing service offerings or expand our market presence,” said Torrie. “This acquisition is a natural fit for our company, clearly distinguishing Morneau Shepell as the pension and benefits administration leader in Canada.” Torrie added that he doesn’t think this has implications for further consolidations, but Morneau Shepell is always open to opportunities.

Morneau Shepell expects to invest between $20 million and $25 million, over a three-year period, in systems and service improvements to support the acquired clients. Excluding this investment, the transaction is expected to be accretive in 2013.