BrazilAon pulls the plug from $30 billion Willis Towers Watson deal
The world’s largest deal in history in the insurance broker and risk management landscape – the $30 billion acquisition of Willis Towers Watson by Aon – has been called off.
The combination of Aon and Willis Towers Watson, currently the number two and three in the market behind Marsh McLennan, would have created a new leader with 95,000 employees and $20.3 billion in annual revenue, compared with $17.2 billion for Marsh McLennan (the parent of Marsh, Mercer, Guy Carpenter and Oliver Wyman).
The deal has now broken down due to objections from the US regulator, which launched an investigation around a year ago into the potential impact of the deal on market concentration. Based on its findings, the US Department of Justice last month filed a lawsuit against the deal, arguing that the proposed merger would lead to a monopoly scenario where the new entity could charge higher prices and leave businesses that rely on the firm’s services with too little alternatives.
In a statement released by Aon, Chief Executive Greg Case said that the impasse with the Department of Justice has created an “unacceptable delay and uncertainty”, and as a result the company has pulled the plug on the deal. Aon will pay Willis Towers Watson a $1 billion termination fee – a penalty for pulling out before closing.
In a statement following Aon’s announcement, US Attorney General Merrick Garland called the decision “a victory for competition and for American businesses, and ultimately, for their customers, employees and retirees across the country.”
Aon had previously received green light from the European antitrust regulator, on the condition that it would sell off different assets to smaller rivals, including $3.6 billion worth of assets to rival Gallagher.
Both antitrust cases focused mainly on the insurance and re(insurance) businesses of Aon and Willis Towers Watson. These units (responsible for by far the largest chunk of their revenues) help companies buy insurance and advise them on risk management. They work on behalf of their corporate clients, earning fees by negotiating insurance packages across a range of insurers.
The firms also have a string of other service lines, including consultancy offerings around compensation & benefits, human capital, health & workplace safety, and mergers & acquisitions. These lines of business were to a much lesser extent placed under the lens, as competition in these fields is fierce.
Meanwhile, Marsh McLennan is understood to be the main beneficiary from the saga. At its quarterly results last week, the industry’s market leader said that “distraction and uncertainty” caused by the broken-down mega-merger had seen a “significant number of Aon and Willis Towers Watson staff” approach the firm for employment opportunities.
