A strategic alliance to create a unified global platform
In a deal essentially transforming the insurance brokerage industry, the second and third largest insurance brokerage firms in the world, Aon plc, and Towers Watson Willis have announced that they will merge. More specifically, Aon will purchase Towers Watson Willis in an “all-share” deal valued at approximately $30 billion effectively creating a combined entity estimated at $80 billion.
“The combination of Willis Towers Watson and Aon is a natural next step in our journey to better serve our clients in the areas of people, risk and capital,” said Willis Towers Watson CEO John Haley. “This transaction accelerates that journey by providing our combined teams the opportunity to drive innovation more quickly and deliver more value.”
“This combination will create a more innovative platform capable of delivering better outcomes for all stakeholders, including clients, colleagues, partners, and investors,” said Aon CEO Greg Case. “Our world-class expertise across risk, retirement and health will accelerate the creation of new solutions that more efficiently match capital with unmet client needs in high-growth areas like cyber, delegated investments, intellectual property, climate risk and health solutions.”
The companies stated that the coalition of talents and growth strategies will help “accelerate innovation from both organizations to benefit clients.”
Further terms of the transaction
According to the terms of the transaction, the newly combined firm will be named Aon and will be led by Greg Case and Aon Chief Financial Officer Christa Davies and will maintain its operating headquarters in London.
The following are further details as outlined by the companies in their official announcement:
Under the terms of the agreement unanimously approved by the Boards of Directors of both companies, each Willis Towers Watson shareholder will receive 1.08 Aon ordinary shares for each Willis Towers Watson ordinary share, and Aon shareholders will continue to own the same number of ordinary shares in the combined company as they do immediately prior to the closing. Upon completion of the combination, existing Aon shareholders will own approximately 63% and existing Willis Towers Watson shareholders will own approximately 37% of the combined company on a fully diluted basis.
Aon anticipates that the transaction will provide annual pre-tax synergies and other cost reductions of $800 million by the third full year of combination, thereby allowing the firm to continue significant investment in innovation and growth. Potential revenue synergies due to complementary capabilities are expected but not included in the synergy estimates. The principal sources of potential synergies and other cost reductions are as follows:
Under the terms of the agreement unanimously approved by the Boards of Directors of both companies, each Willis Towers Watson shareholder will receive 1.08 Aon ordinary shares for each Willis Towers Watson ordinary share, and Aon shareholders will continue to own the same number of ordinary shares in the combined company as they do immediately prior to the closing. Upon completion of the combination, existing Aon shareholders will own approximately 63% and existing Willis Towers Watson shareholders will own approximately 37% of the combined company on a fully diluted basis.
Aon anticipates that the transaction will provide annual pre-tax synergies and other cost reductions of $800 million by the third full year of combination, thereby allowing the firm to continue significant investment in innovation and growth. Potential revenue synergies due to complementary capabilities are expected but not included in the synergy estimates.
If at first, you don’t succeed, try, try again
The announced acquisition of Willis Towers Watson comes almost exactly one year after Aon’s first attempt to acquire the insurance brokerage firm. According to reports on that first attempt, Aon ultimately abandoned the talks due to regulatory issues, one of which required disclose its initial interest in Willis Towers Watson pursuant to Irish law. After calling off the first attempt, Aon reserved its right to continue the proposed deal within the next 12 months.
