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Aon & WTW agree $3.57bn sale of certain assets to Gallagher

12th May 2021 - Author: Luke Gallin

Global re/insurance brokers Aon and Willis Towers Watson (WTW) have signed a definitive agreement to sell Willis Re and a number of other WTW assets to Arthur J. Gallagher & Co. (Gallagher), for a total consideration of $3.57 billion.

aon-willis-towers-watson-merger-antitrustThe announcement comes as the pair look to satisfy the European Commission’s (EC) competition concerns around the proposed $30 billion combination of Aon and WTW.

The agreement includes WTW’s reinsurance broking arm, Willis Re, alongside a set of WTW corporate risk and broking and health and benefits services to Gallagher.

Aon and WTW state that the agreement with rival broker Gallagher resolves questions raised by the EC and is designed to address certain questions raised by regulatory authorities in other jurisdictions.

“This agreement demonstrates strong momentum on the path to close our proposed combination with Willis Towers Watson. We’ve used this time to align our future leadership team around a one-firm culture that will create new opportunities for colleagues, accelerate innovation on behalf of clients and deliver shareholders the long-term value creation they have come to expect from our team,” said Greg Case, Aon’s Chief Executive Officer (CEO). 

John HaleyWTW’s CEO, added: “We announced this combination knowing that the complementary capabilities of our two firms would allow us to deliver more value to clients and opportunities for colleagues. The events of the last year have only reinforced that rationale, and this announcement is an important step toward realizing that potential.

“We appreciate the extraordinary value these colleagues have delivered to our clients and our company. We are confident they have a bright future at Gallagher.”

Specifically, Gallagher, which generated revenue of more than $6 billion in 2020, has agreed to acquire a group of businesses from WTW that includes the following:

  • Willis Re operations globally, excluding operations in mainland China and Hong Kong;
  • Global cedent facultative reinsurance, excluding operations in mainland China and Hong Kong;
  • Corporate Risk and Broking business unit known as Inspace globally and certain business undertaken for Aerospace Manufacturing clients;
  • Corporate Risk and Broking services in certain countries in Europe (FranceGermanythe Netherlands and Spain), excluding Affinity; Bermuda; cyber in the UK; and certain accounts in the Houston and San Francisco offices in the U.S.;
  • Corporate Risk and Broking services for Property & Casualty and Finex insurance in the European Economic Area, UK, U.S., Brazil and Hong Kong relating to certain large multinational companies headquartered in FranceGermanythe Netherlands and Spain;
  • Corporate Risk and Broking Finex accounts relating to certain large multinational companies headquartered in the UK; and
  • Health & Benefits business units in FranceSpain and Germany.

This is a substantial package of divestments and far exceeds the merger divestment revenue cap, that had been set at $1.8 billion.

The arrangement with Gallagher, which was first reported by Bloomberg last week, is dependent on the completion of the pending mega-merger between Aon and WTW, and other customary closing conditions.

Both Aon and WTW note that while they are working to complete the deal as soon as possible in Q3 2021, completion remains subject to the receipt of required regulatory approvals and clearances, including with respect to U.S. antitrust laws, as well as other customary closing conditions.

Today, Aon has reiterated that it’s committed to $800 million of cost synergies and expects the combination to create significant shareholder value.

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