Global insurance brokers Aon and Willis Towers Watson announced a definitive agreement to combine in an all-stock transaction with an implied combined equity value of approximately $80 billion.
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.
According to S&P, Aon intends to combine with Willis in an all-stock transaction valued at about $30 billion. (Willis shares will be exchanged to Aon shares.)
“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 combined company, to be named Aon, will be focused on the areas of risk, retirement and health.
Combined the companies have more than $20 billion in revenue. Aon reported $11 billion in revenue with $2.2 billion net income for 2019 compared to $9 billion revenue and $1.4 billion net income for Willis Towers Watson.
Aon will maintain operating headquarters in London, United Kingdom. The parent company will be incorporated in Ireland. The combined firm will have 95,000 employee globally, with what the announcement said will be a “significant presence” in Chicago, New York and Singapore.
John Haley will take on the role of executive chairman with a focus on growth and innovation strategy. The combined firm will be led by Greg Case and Aon Chief Financial Officer Christa Davies. The board of directors will comprise proportional members from Aon and Willis Towers Watson’s current directors.
This is the second run at an Aon-Willis Towers Watson merger. A year ago on March 5, Aon confirmed it was exploring a tie-up with Willis but one day later, it called off the talks. Aon was required to disclose its interest in Willis Towers Watson, which is subject to Irish takeover regulations requiring Aon to make the disclosure early in the process.
At the time, Aon said it reserved the right within the next 12 months to set aside that announcement that it wasn’t intending to pursue the Willis deal.
Last year, some analysts suggested that regulatory issues were likely to be a concern for a deal given Aon and Willis are the second- and third-largest insurance brokers by revenue.
The largest broker by revenue, Marsh & McLennan, last year closed its largest deal with a $5.7 billion agreement to buy Jardine Lloyd Thompson Group.
Willis Towers was formed in 2016 through Willis Group Holdings Plc’s $8.9 billion acquisition of the consultancy Towers Watson & Co., the largest insurance broker deal to date.
The transaction is subject to the approval of the shareholders of both Aon Ireland and Willis Towers Watson, as well as other customary closing conditions, including required regulatory approvals. The parties expect the transaction to close in the first half of 2021.
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