Skip to main content

You are here

Advertisement

Aon to Merge with Willis Towers Watson in Reported $30 Billion Deal

Service Providers

mergers and acquisitionsNothing appears to have slowed merger and acquisition activity, as two of the largest broker and professional services firms have entered into an agreement to join forces. 

With a focus on “improving client value,” Aon and Willis Towers Watson plan to merge in a reported $30 billion all-stock transaction, resulting in a combined equity value of approximately $80 billion.  

Under the terms of the agreement, which has been approved by the Board of Directors of both companies, Willis Towers Watson shareholders will receive 1.08 Aon shares for each Willis Towers Watson share. This, according to the announcement, represents a 16.2% premium to Willis Towers Watson’s closing share price on March 6, 2020. The combined company will be named Aon and will maintain operating headquarters in London, United Kingdom. 

“This combination will create a more innovative platform capable of delivering better outcomes for all stakeholders, including clients, colleagues, partners and investors,” says 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.”

Current Willis Towers Watson CEO John Haley will take on the role of Executive Chairman, while the combined firm will be led by Greg Case and Aon Chief Financial Officer Christa Davies.

The combined firm anticipates savings of $267 million in the first full year of the combination, reaching $600 million in the second full year, and a full $800 million in the third year. For fiscal year 2019, the two firms generated revenues of approximately $20 billion and free cash flow of $2.4 billion. Aon currently has 50,000 employees in 120 countries, while Willis Towers Watson has 45,000 employees and services clients in more than 140 countries.

The firms expect the transaction to close in the first half of 2021, subject to regulatory and shareholder approvals and other closing conditions.

This announcement comes as M&A activity in the wealth management industry has had seven straight years of record-setting activity, according to Echelon Partners, and it doesn’t appear to be slowing down.  

Marsh & McLennan’s acquisition spree, including the April 2019 acquisition of Jardine Lloyd Thompson Group for $5.6 billion, catapulted the firm to the top of the insurance advisory and brokerage firm business with $56.5 billion in market capitalization. But that standing may now change, given the announcement by Aon and Willis Towers Watson. 

A recent report by Cerulli also suggests that retirement plan providers must be prepared to consider opportunities for growth—whether organically or through mergers and acquisitions—in order to maintain profitability. Motivated by considerations of scale and operational efficiencies, the report notes that M&A activity has continued in the recordkeeping space, as well as with asset managers, consultant intermediaries and third-party administrators. 

Advertisement