Arguably some of the biggest merger news to have hit the insurance sphere in recent times – in an all-stock transaction, which values the combined businesses at approximately $80 billion, Aon is set to buy WTW for $30 billion.
Current Aon CEO Greg Case will lead the combined firm alongside Aon Chief Financial Officer Christa Davies. WTW CEO John Haley will take on the role of Executive Chairman, with a focus on growth and innovation strategy. According to the business, the new board of directors will comprise proportional members from Aon and WTW’s current directors.
“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,” Haley said. “This transaction accelerates that journey by providing our combined teams the opportunity to drive innovation more quickly and deliver more value.”
Case added that the new combination would create a more innovative platform capable of delivering better outcomes for all stakeholders, including clients, colleagues, partners and investors. “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,” he said.
The transaction is expected to go through in the first half of 2021 and is also revealed to provide annual pre-tax synergies and other cost reductions of $800 million by the third year of combination.
Commenting on the deal, Simon Fitzsimmons, Director of Mazars Deal Advisory, said: “Another blockbuster deal in the global insurance broking market, seeing brokers ranked second and third combine together to become the largest global insurance broker, knocking Marsh off its current perch. The CMA will no doubt deliberate on the transaction before giving its blessing (which also needs shareholder approval) – however, speculation already abounds that some of the combined divisions will need to be spun off to appease the CMA as the market options for clients are compressed even further by this merger following that of Marsh and JLT only a year ago.”
He added: “Further M&A opportunities from this deal will materialise either indirectly through chance spin-offs or directly as a result of the CMA decision, and with a predicted £1 billion of synergies, the ripples of this move will be felt throughout the market for some time to come.”