Global insurance and reinsurance broker Aon has agreed to sell the Benefits Administration & HR Business Process Outsourcing (BPO) platform of its Aon Hewitt division to Blackstone, for up to $4.8 billion.
The broker announced that it’s signed a definitive agreement to sell the business units to investment giant Blackstone for a cash consideration of $4.3 billion at closing, which could rise by another $500 million dependent on future performance.
“This transaction reinforces Aon’s position as the leading, global professional services firm focused on risk, retirement and health. The sale of our outsourcing platform creates incremental capital to strengthen growth in core operations, and accelerates the pursuit of inorganic growth opportunities that address emerging client needs, similar to recent acquisitions in cyber risk advisory and health brokerage solutions,” said Greg Case, President and Chief Executive Officer (CEO), Aon plc.
The re/insurance broker states that the sale is expected to result in total, after-tax cash proceeds of approximately $3 billion, and is expected to close during the second-quarter of 2017.
Aon predicts that the sale will improve its return on invested capital as a result of the effective deployment of free cash flow from operations and transaction proceeds, potential savings from operating model advances, and a lower effective tax rate.
A portion of the funds from the deal with Blackstone will be allocated to increase share repurchases in the coming months, with the broker increasing its repurchase programme by $5 billion, to a total $7.7 billion as at February 10th, 2017.
“We believe that this world-class platform will thrive under Blackstone’s ownership, providing clients the level of service and performance they have come to expect and allowing us to further reshape our portfolio to focus on stronger growth and higher return on invested capital opportunities consistent with our strategy,” added Case.