Aon and Willis Towers Watson Terminate $30 Billion Proposed Merger

Aon and Willis Towers Watson, two of the world's largest insurance brokers, have terminated their $30 billion proposed merger agreement due to a lawsuit by the U.S. Department of Justice.

Kathryn Underwood - Author

Jul. 26 2021, Published 11:51 a.m. ET

Aon sign
Source: Aon Facebook

Aon plc will not be merging with Willis Towers Watson and will pay a $1 billion termination fee to the other firm.

Two firms that both provide services in the risk management sector have announced their decision to terminate their proposed merger. Aon Plc and Willis Towers Watson, both global companies with headquarters in the United Kingdom, announced their plans to combine their businesses in March 2020.

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After facing legal proceedings from the U.S. Department of Justice, the firms announced that they won't be moving forward with the planned merger. Previously, the merger faced concerns from the European Union regarding the size of the merger, which would have made Aon the largest insurance broker in the world. The U.S. Department of Justice's lawsuit was too much for the companies.

What is Aon?

Investors can find Aon stock on the NYSE under the ticker symbol "AON." The company operates in 120 countries and employs over 50,000 people worldwide.

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aon merger
Source: Aon Facebook, Willis Towers Watson Facebook

AON is primarily an insurance broker that sells products to manage financial risk. This includes solutions for commercial risk, health, retirement, and reinsurance. It also offers data analytic services to help reduce volatility and improve performance.

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What is Willis Towers Watson?

Founded in 1828, Willis Towers Watson is a global advisory, broking, and solutions company. The firm has about 45,000 employees in over 140 countries and markets worldwide. It trades publicly on the Nasdaq Exchange under the ticker symbol "WLTW."

Why was the Aon-Willis merger called off?

The merger between the two insurance giants would have been a $30 billion all-stock transaction, which would make Aon the biggest insurance company worldwide.

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Although the firms complied with the requirements of the European Union, leading the EU to approve of the deal, an agreement couldn't be reached with the U.S. Department of Justice.

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The Department of Justice filed a lawsuit to block the proposed merger. Concerns that the merger would reduce competition in a fair market, leading to higher prices for their products, were behind the DoJ’s suit, according to Reuters.

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department of justice aon merger
Source: Getty

The decision to terminate the merger agreement was largely due to the potential of a lengthy trial that would postpone the merger proceedings well into 2022. Some January 6 Capitol trial proceedings would have preceded the Aon-Willis-DoJ lawsuit, which would cause even more delays.

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The two main issues to go to trial were whether the merger would cause U.S. clients to face lowered competition in buying insurance for property, casualty, and financial risk, as well as in health coverage.

Aon CEO Greg Case said that the DoJ had a “fundamental misunderstanding of the marketplace” and also blamed “poor timing and other factors ultimately outside our control” for the failed merger, according to Reuters.

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What will happen to AON and Willis Towers Watson?

Since the merger to combine the companies has been nixed, AON will pay a $1 billion termination fee to Willis Towers Watson. Both companies will continue on their respective paths and operate separately.

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Willis Towers Watson stated on July 26 that its existing share repurchase program will increase by $1 billion.

Currently, according to the most recent data from Business Insurance, AON ranks second and WLTW ranks third among the world’s largest insurance brokers. Marsh & McLennan Cos Inc. takes the number-one spot on that list and trades publicly as "MMC."


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