Aon’s acquisition of Willis Towers Watson faces regulatory veto
When news broke in 2020 that Aon intended to purchase competitor Willis Towers Watson, it was expected to create the world’s largest insurance broker. However, the US Department of Justice looks to have thrown a spanner in the works, after launching a landmark antitrust case to block the deal, which is asserts would be bad for competition.
The ongoing acquisition saga between Aon and Willis Towers Watson looks to have taken yet another twist. In March last year, Aon announced plans to buy rival Willis Towers Watson for $30 billion in an all-stock transaction – one year after previous talks between the two companies broke down, with preliminary talks having been leaked 24 hours earlier.
When the deal was been confirmed, and unanimously approved by the boards of directors of both companies in 2020, it came 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 – while in 2019, Marsh & McLennan bought Jardine Lloyd Thompson for £4.3 billion.
This latest action looks to have been a bridge too far for US competition watchdogs, though, with the US Department of Justice’s antitrust division now calling for a legal halt to the merger. According to the regulator, if Willis Towers Watson were to become part of Aon, the insurance consulting industry would see its current Big Three of Aon, Willis Towers Watson and Marsh & McLennan become “the Big Two” – something which would be bad for market competition, as the sector’s customers – companies, pension funds and retirees who rely on insurance brokers – would have less choice regarding services and pricing.
Aon had planned to formally complete the transaction in the first half of 2021, but while the watchdog’s attempts to scupper the deal have made that impossible, the company is not giving up on the acquisition just yet. A joint statement from Aon and Willis Towers Watson suggested the case points to "a lack of knowledge of our companies, the clients we serve and the market in which we operate," while alleging the firms were making progress in the acquisition process with other regulators.
Together, Aon and Willis Towers Watson are bigger than the current top dog in the insurance brokering market, Marsh & McLennan. If it does move ahead, the acquisition would create an industry giant, with combined revenues of approximately $20 billion, incorporated in Ireland and operating as Aon, while the Willis Towers Watson brand would be retired.
Aon would maintain operating headquarters in London, and its circa 50,000 employees and $11 billion revenue would be joined by Willis Towers Watson’s 45,000 staff and $9 billion revenue. Meanwhile, the consulting departments of Aon and Willis Towers Watson would blend to form a serious rival to Mercer – Marsh & McLennan’s subsidiary for HR consulting services.
