Aon buys rival Willis Towers Watson in a $30 billion deal
Aon and Willis Towers Watson, two of the three world’s largest HR consulting firms and insurance brokers, have joined forces to become the new market leader in their industry.
The deal, which is the largest ever in the landscape, sees Aon buy rival Willis Towers Watson for $30 billion in an all-stock transaction. The move comes around a year after previous talks between the two companies broke down, less than 24 hours after preliminary talks leaked. Now, the deal has been confirmed, and unanimously approved by the boards of directors of both companies.
According to Greg Case, the chief executive officer of Aon, the transaction makes the company fundamentally more capable and responsive to addressing client needs. “Our 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 stated that the combination would also allow the companies to be more innovative and improve their technology platform as well as intellectual property.
The consolidation of the two companies is expected to deliver $800 million of synergies by the third year. Three quarters of the savings will come from headcount reduction in back office functions, with the rest coming from savings in technology and real estate. Notably, the two companies are headquartered just metres away from each other in central London.
Mega mergers
The deal comes at a time of rapid consolidation at the top of the human capital services and insurance broking industry. Willis Towers Watson itself was formed in 2018 following the $8.9 billion mega merger between Towers Watson an Willis Group. And last year, main of the duo Marsh & McLennan bought Jardine Lloyd Thompson for £4.3 billion.
Following the integration, the combined Aon and Willis Towers Watson will be the world’s largest commercial insurance broker business with total revenues of $19 billion, just ahead of Marsh & McLennan ($17 billion) and a distance ahead of number three Arthur J Gallagher ($5 billion).
Meanwhile, the combined consulting departments of Aon and Willis Towers Watson will blend to form a serious rival to Mercer – Marsh & McLennan’s subsidiary for HR consulting services.
The parties expect the transaction to close in the first half of 2021. Once cleared by the antitrust authorities, the parent company will be incorporated in Ireland and operate as Aon, with the Willis Towers Watson brand retired. Aon will maintain operating headquarters in London, and have 95,000 employee globally generating more than $20 billion in revenue.
The firm will be led by Aon chief executive officer Greg Case and chief financial officer Christa Davies, with Willis Towers Watson chief executive officer John Haley appointed executive chairman with responsibility for growth and innovation.
