Aon-Willis merger no longer going ahead

Aon plc is no longer going to acquire Willis Towers Watson plc.

Aon and Willis – the world’s second and third biggest commercial property and casualty brokerage respectively – are terminating their US$30-billion combination agreement, Aon announced Monday. The proposed agreement was originally announced in March of 2020.

But on June 16, 2021, the U.S. federal justice department announced it is asking an American court to block the deal. The court had yet to issue a ruling as of Monday.

“Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the U.S. Department of Justice,” Aon CEO Greg Case said July 26.

Aon is now paying a US$1-billion termination fee to Willis Towers Watson.

Had the deal closed, each Willis Towers Watson shareholder would have received 1.08 Aon shares for each of its Willis Towers Watson shares, plus cash. Aon shareholders would have continued to own the same number of Aon shares as they did immediately prior to the closing.

Aon and Willis are incorporated in Ireland, with principal offices in London and are traded on the New York Stock Exchange. The combination would have required regulatory approval in multiple jurisdictions including Canada and the U.S. Both Aon and Willis have offices in Canada from which they place commercial P&C insurance.

In its court filing, the DoJ claimed the deal would “substantially lessen competition” in risk broking for large corporate customers.

“The DoJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point,” Case said July 26.

Marsh & McLennan Companies was the biggest commercial P&C broker in the world, with $17.2 billion in 2020, A.M. Best Company Inc. said in a report released July 1. Placing second, third and fourth respectively were Aon, Willis Towers Watson and Arthur J. Gallagher & Co. with 2020 revenues of $11.07 billion, $9.35 billion and $6 billion respectively.

Brokerages other than Aon, Marsh and Willis do not offer large customers the same quality and combination of services (for example, an extensive global networks of offices and sophisticated data and analytics) that the Big Three currently deliver, the U.S. DoJ argued in a recent court filing.

For its part, Aon said the DoJ complaint reflects a lack of understanding of Aon’s business, the clients Aon serves and the marketplaces in which Aon operates.

Feature image via iStock.com/Atstock Productions