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Sedgwick has signed an agreement to acquire York Risk Services Group. Following the close of the transaction, Sedgwick will gain more than 60 offices across the US and nearly 5,000 employees, taking its total workforce up to nearly 27,000.

Once approved, the deal would mark Sedgwick’s third acquisition of a TPA in five years. The Memphis, Tennessee-based company purchased Cunningham Lindsey in 2018 and T&H Global Holdings, owner of VeriClaim, in 2014.

Sedgwick Group President Michael Arbour said during an interview that the purchase of York will enhance the company’s scope of services and improve its access to talent in the claims industry. He said York is active in some market segments where Sedgwick has little presence, such as with Longshore and Harbor Workers’ Compensation and Defense Base Act claims and the administration of group risk pools.

He noted that York also is in a strong position as a service provider for public agencies and provides managed care services for other claims administrators. Sedgwick also provides managed care services, but only to clients for whom it adjusts claims, he said.

“We’ve admired them as a friendly competitor for years,” Arbour said. “They do a lot of things that we do and they do a lot things that we don’t do.”

“Joining forces with Sedgwick will provide enhanced capabilities for York’s clients and new opportunities for our associates,” said Thomas Warsop, chairman and CEO of York. “It’s great news for all.”

“At Sedgwick, taking care of people is at the heart of everything we do,” North said. “Bringing together the expertise and capabilities of Sedgwick and York will allow us to serve more customers in more places and show an unprecedented number of people how caring counts.”

BofA Merrill Lynch and Morgan Stanley & Co. LLC served as financial advisors to Sedgwick, and Simpson Thacher & Bartlett LLP and Clifford Chance US LLP served as legal advisors. Jefferies LLC and J.P. Morgan Securities LLC served as financial advisors to York, and Fried, Frank, Harris, Shriver & Jacobson LLP served as its legal advisor. BofA Merrill Lynch and Morgan Stanley Senior Funding, Inc. have provided committed debt financing for the transaction.

The closing of the transaction is subject to customary conditions and regulatory approvals. The terms of the agreement were not disclosed.

Sedgwick isn’t the only third-party administrator on a buying spree. Also on Monday, Fairfax Financial Holdings’ Riverstone subsidiary announced that it has acquired Rockville Risk Management Associates and its sister company, ER Quinn Co.

Joe Paduda, owner of the employer consulting firm Health Strategy Associates, said the merger of the two TPAs – both of which adjust workers’ compensation claims – is not surprising.  “There’s no question there will be more consolidation in the industry,” he said in an email. “Worker’s comp is a shrinking business and consolidation is a foregone conclusion.”