insurance broker Lloyd Thompson Group Plc, thereby strengthening its international presence and providing it with greater expertise in the London insurance broking market.

The acquisition, which would be done through an offer by Lloyd Thompson for JIB shares, would create Britain's third-largest publicly traded insurance broker valued at more than 300 million ($500 million). JIB shareholders will have 57 percent of the new company, to be called Jardine Thompson Group Plc.

Consolidation has picked up pace as insurance brokers strive to reinforce market positions and extend their reach in the face of competition. This gives brokers a stronger position from which to woo clients and allows them to cut some costs, improving profitability.

"The driver for this merger is business enhancement,'' Lloyd Thompson Chief Executive Ken Carter said in an interview. "Any merger will produce cost savings. The purpose of this merger is to get more business out of the networks.'' The union marries Lloyd Thompson's marketing and product innovation skills with JIB's international presence, said Carter. Lloyd Thompson is active in the London international insurance market focusing on Europe, America and Bermuda -- where it has a 50 percent stake in Triangle Brokerage Ltd.

JIB has a strong presence in the Asia-Pacific region, a "very important associate relationship in France and a key international reinsurance business operating through five countries''.

JIB shareholders will receive four new Lloyd Thompson shares for every five JIB shares they hold. This pushed JIB shares up as much as 23.5 pence to 132.5p. Lloyd Thompson shares rose 7.5 pence to 180p.

About 66 percent of JIB shareholders have agreed to the transaction.

"The combined businesses will be more competitive than either company on its own and better placed to serve the increasingly sophisticated requirements of their clients,'' said Bermuda-based Jardine Matheson Holdings Ltd., which holds 60 percent of JIB and will hold 34 percent of the enlarged company. The move "responds positively to the need for consolidation in the insurance broking industry''.

Savings will arise from combining the administrative and support functions of the two companies London operations, its information technology systems and its head offices. The joint head office will be based in London. Job losses will be mainly from administrative and support staff.

The companies said "the net incremental revenues, margin improvements and cost savings expected to arise from the merger will be significantly enhancing'' for earnings per share for the year ending December 31, 1998, the first full year following completion.

The union, prompted by the "increasingly competitive market environment,'' will enable the companies to develop "new operations in geographic or product niches where there is a real prospect of achieving market leadership and profitable growth''.

JIB has a "tremendous position throughout (the Asia- Pacific) region and that's a very attractive jewel'' which will produce a "significant amount of growth,'' said Carter. "We see Europe and Latin America as well as the traditional insurance markets in America, London and the Far East as being very important.'' Lloyd Thompson will pay a dividend for the six months to end December 31 of 6.25 pence per share and a special dividend of six pence providing the takeover is approved and proceeds. This will return capital to Lloyd Thompson shareholders and JIB shareholders won't be eligible for it.

JIB will pay its shareholders a dividend of five pence for the second half ending December 31.

Lloyd Thompson chief executive Carter will become chief executive of the enlarged company while JIB's chief executive, John Barton, will be chairman of Jardine Lloyd Thompson.