Aon and WTW cancel $30bn mega-merger
On the go: Aon and Willis Towers Watson have abandoned their planned $30bn (£21.7bn) merger after an intervention from the US Department of Justice.
In a statement released by Aon on Monday, chief executive Greg Case said the company had “reached an impasse” with the DoJ after the department sued the two companies last month to block the deal.
Aon and Willis Towers Watson announced in March 2020 that they planned to combine their businesses to create the world’s largest insurance broker, a year after Aon first confirmed reports it was investigating such a deal.
The two companies’ investment and benefits consultancies and fiduciary management offerings would also have been combined, creating a dominant UK player in these sectors.
The two companies had agreed to sell several US and German subsidiaries in a bid to get the deal approved, and had received the assent of the European Commission’s competition watchdog.
However, the DoJ maintained that the transaction would reduce market competition and lead to higher prices. US president Joe Biden recently passed an executive order attempting to put the brakes on a booming merger and acquisition market.
In a video sent to employees, cited by Reuters, Aon’s Case said the DoJ’s decision was “remarkably out of step with the rest of the regulatory community”. While the companies were confident of a court win, the case was unlikely to be heard until “well into 2022”, he explained, increasing deal costs substantially.
“At best, DoJ's perspective demonstrates a fundamental misunderstanding of the marketplace,” the CEO added. “At worst, our combination was blocked by poor timing and other factors ultimately outside our control.”
In today’s statement, Case said: “Over the last 16 months, our colleagues have turned potential challenges into opportunities to advance our Aon United strategy.
“We built on our track record of innovation, continued to deliver industry-leading performance and progress against our key financial metrics and move forward with the strongest colleague engagement and client feedback scores in over a decade. Our respect for Willis Towers Watson and the team members we've come to know through this process has only grown.”
John Haley, CEO at Willis Towers Watson, added that his company remained “well positioned to compete vigorously across our businesses around the world and will continue to introduce important innovations to the market”.
As a result of the termination of the merger, Aon must pay a $1bn termination fee to Willis Towers Watson. In a separate market announcement this morning, Willis Towers Watson announced a $1bn increase to its share buyback programme.