Aon to purchase Willis Towers for $30 billion

Aon to purchase Willis Towers for $30 billion
The deal will combine the world's second- and third-biggest insurance brokerages
MAR 09, 2020
By  Bloomberg

Aon Plc agreed to buy Willis Towers Watson in an almost $30 billion transaction that combines the world’s second- and third-biggest insurance brokerages.

The all-stock deal, the largest ever for the industry, comes almost exactly a year after previous talks between the two companies broke down. Aon Chief Executive Greg Case and CFO Christa Davies will lead the combined company, according to a statement Monday.

Brokerages, which help connect businesses looking for coverage with insurers, have been aggressively merging to diversify, boost commissions and serve customers who increasingly want to deal with fewer intermediaries. Marsh & McLennan Cos.. the largest broker, bought Jardine Lloyd Thompson Group Plc last year for $5.7 billion. Willis Towers was itself formed in 2016 in an $8.9 billion merger.

The Aon deal “combines two highly complementary businesses into a technology-enabled global platform that is more relevant and responsive to client needs,” the companies said in the statement.

Willis Towers investors will receive 1.08 Aon shares for each of their shares, with existing Aon investors owning about 63% of the company once the deal is completed. Willis Towers Watson shareholders will get about $231.99 a share in stock. That’s 16% higher than the company’s closing price on Friday.

Last year, Aon and Willis Towers Watson pulled the plug on a proposed combination less than 24 hours after preliminary talks leaked. A Bloomberg News report thrust the discussions into the public, making it difficult for Aon to move forward because it was still refining the terms of its offer, people familiar with the matter said at the time.

Irish regulations forced the disclosure of early-stage talks last year. Aon said at the time that it reserved the right within 12 months to set aside its announcement that it wasn’t intending to pursue a deal. While Aon was restricted from reaching out to Willis for at least a year, Willis was free to approach its pursuer, according to a person familiar with the matter.

Earnings impact

The deal will add to earnings in the first full year of the combination, and provide annual pretax synergies and cost reductions of about $800 million by the third year, according to the statement. Willis Towers CEO John Haley will become executive chairman.

“We’re very confident in Aon’s ability to build shareholder value from this combination over time,” analysts at Keefe Bruyette & Woods said in a note to clients.

Aon, which plans to keep its operating headquarters in London, fell 11% to $190.91 in early New York trading at 8:08 a.m. Willis Towers increased 1.3% to $202.25.

Aon was advised by Credit Suisse Group while Willis Towers Watson worked with Goldman Sachs Group Inc.

Latest News

Five-person Raymond James team jumps to Janney in Maryland
Five-person Raymond James team jumps to Janney in Maryland

The group led by a 37-year industry veteran brings $470 million in assets to the Philadelphia-based broker dealer.

$20B Merit looks to next phase as Constellation takes minority stake
$20B Merit looks to next phase as Constellation takes minority stake

The Atlanta, Georgia-based national wealth firm revealed its new PE partner as prior backers Wealth Partners Capital Group and HGGC’s Aspire Holdings exited their investments.

$350M father-son duo hops from Osaic to Equitable Advisors
$350M father-son duo hops from Osaic to Equitable Advisors

The latest departures in Ohio mark another setback for the hybrid RIA, which is looking to "expanding its presence across all models and segments of the wealth management industry.”

Fresh off HPS acquisition, BlackRock inks deal for $7.3B ElmTree Funds
Fresh off HPS acquisition, BlackRock inks deal for $7.3B ElmTree Funds

The St. Louis-based real estate investment firm gives the asset management giant a valuable access point to the roughly $1 trillion net lease market.

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.