According to L’argus de l’assurance, rumors circulating in the French broking market suggest that Willis Towers Watson (WTW) could be considering a sale of its Gras Savoye unit ahead of its planned merger with Aon.
The proposed combination of the broking giants is currently under investigation by regulators, with concerns centering around potential competition issues.
For some time now, it’s been suggested that WTW may have to look at a sale of its reinsurance broking arm, Willis Re, in order for the merger to meet regulatory requirements.
But sources at L’argus de l’assurance have said that the divestiture of Willis Re may not go far enough for European authorities, which has led to speculation that Gras Savoye could also be on the table.
The publication notes that the French brokerage is a strong regional asset for WTW with a turnover of €517 million in 2019 and a high penetration rate among French SMEs, meaning it’s likely to garner strong interest from potential buyers.
But more than this, it’s thought that the sale could be a fairly painless process for WTW, as sources say Gras Savoye has remained relatively independent from WTW since its acquisition in 2016, including “completely separate” information systems.
These reports are based on the understanding that Aon and WTW will have to make €1.5 billion ($1.8 billion) worth of divestitures prior to their merger to meet the standards of the European competition directorate.
As we previously reported, the sale of Willis Re alone is only expected to fulfill €970 million ($1.15 billion) of that quota, meaning further sales would be required to satisfy European regulators.
Earlier this month, WTW completed the sale of its specialist broking arm, Miller, to Cinven and GIC, in what some have viewed as another move to avoid competition challenges.
It’s thought that the European Commission may soon be ready to publicly voice its antitrust concerns via a statement of objections, a charge sheet explaining potential competitive harm as a result of the mega-merger.
However, the merger is also under scrutiny by other international regulators, with recent reports suggesting that the US Department of Justice may have antitrust concerns about the reinsurance aspect of the deal, as well as in other areas like benefits and large corporate clients.
Likewise, the Australian Competition & Consumer Commission (ACCC) has warned that the merger could “significantly lessen competition” in Australia following similar statements from New Zealand authorities.
