Aon and WTW terminate $30bn deal over DoJ ‘impasse’

Aon and Willis Towers Watson (WTW) have cancelled their $30bn merger over an “impasse” with the US Department of Justice (DoJ).

The mutual agreement to terminate the deal will see Aon pay WTW a $1bn termination fee.

The companies will now move forward independently, they said in a statement.

As the news broke, Aon announced that it has extended the contract of CEO Greg Case and CFO Christina Davies for an additional three years to 1 April 2026.

“Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the US Department of Justice,” said Mr Case.

“The DoJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point,” he added.

The US DoJ had filed a suit against Aon and WTW to block the deal over competition concerns, arguing it would drive higher prices for customers.

The trial was scheduled to start on 18-23 November after Aon and WTW complained the original February 2022 date sought by the DoJ was “unacceptable”. The brokers had been pushing for the DoJ trial to take place next month to give them a chance of completing within the timeframe set out in the original merger agreement.

But it seems the DoJ’s refusal to bring the case forward was the final nail in the acquisition’s coffin.

The deal had also caused other regulators around the world concern, with investigations ongoing in parts of Asia and elsewhere.

The EC initially said it wasn’t happy with the deal but gave conditional approval earlier this month approval on the back of a raft of previously announced divestments of WTW business to A J Gallagher and other buyers.

The news follows an investigation by European anti-competition regulators over fears the deal would reduce choice for Aon and WTW customers. The investigation raised concerns over areas including broking services for large companies and multinationals in Europe, reinsurance buyers and pension administration in Germany.

Aon agreed to sell various WTW businesses in Europe, the US and Bermuda for $3.57bn following the investigation, to assuage the EU and other regulators around the world.

The full list of proposed remedies would have seen Aon sell WTW’s entire commercial risk brokerage country organisations in France, Germany, Spain and the Netherlands to A J Gallagher.

A J Gallagher would also have picked up WTW’s cyber brokerage business in the UK, its entire space and aerospace manufacturing brokerage business, and global treaty and facultative reinsurance and brokerage organisations. A J Gallagher would also have bought a “substantial” set of additional international and EEA customer contacts and personnel.

In addition, Aon was going to divest its entire German retirement benefits consulting and pension administration businesses, as well as its German investment solutions business.

The agreement with A J Gallagher was dependent on the Aon-WTW deal going ahead so those businesses set for sale will now, presumably, remain part of WTW.

Announcing the termination of the Aon-WTW merger, Mr Case said his company’s respect for WTW and its team has only grown during the now-cancelled acquisition process.

WTW CEO John Hayley said: “Going forward, our focus remains steadfast on our colleagues, our clients and our shareholders. We believe we are well positioned to compete vigorously across our businesses around the world and will continue to introduce important innovations to the market. We appreciate and deeply respect all the Aon colleagues we got to know through this process.”

Aon’s half-year results on 30 July and WTW’s on 3 August now look like blockbuster events that may shed more light on what went wrong with the deal from the two brokers’ point of view.

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