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Aon – WTW: Remedy proposal reportedly submitted to US DOJ

22nd April 2021 - Author: Steve Evans

It’s been reported that Aon has submitted a remedy offer to the US Department of Justice Antitrust Division as it seeks to gain approval for its planned acquisition of rival Willis Towers Watson (WTW) .

aon-willis-towers-watson-merger-antitrustEarlier this week we reported on the news that an expansion of the divestment package related to the merger needs to include the US, in order to appease the Department of Justice (DoJ).

It seems Aon has been on the front-foot again with this and a report from specialist antitrust and M&A publisher CTFN states that the insurance and reinsurance broking giant has proactively come forwards with a proposal for a package of concessions, in an attempt to remedy the situation and gain approval from the US DOJ.

However, while the remedy package offer has reportedly been submitted, the report from CTFN also states that its sources said negotiations between Aon and the Antitrust Division had not begun at the time of their publishing.

As a result, the remedy package of concessions submitted should be considered an opening gambit in the process to gain US approval for the Aon and Willis Towers Watson (WLTW) merger, it seems.

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CTFN’s sources said that as a result it’s likely the initial offer will need adding to as well.

CFTN’s Diane Alter also reports that high-level depositions are being taken from senior company officials by the US DOJ, but that this doesn’t necessarily mean anything specific and could just be setting the scene for a negotiation.

It’s said that the overall way to satisfy the US DOJ may involve a larger package of concessions than just the offer made to the European Commission (EC), which ties in with our report that any package will need to expand on that to satisfy any competition concerns specific to the US, as well as to other regions of the world.

We continue to believe that it’s likely the EC remedy package provides the foundation for a globally approved set of concessions to satisfy all regulators, particularly as it’s believed reinsurance unit Willis Re is part of that (which represents a larger, global entity).

At this stage, it seems likely the US Antitrust Division of the DOJ is preparing the case, identifying whether there is any case for litigation (which is typical, but doesn’t mean litigation is in the offing), before responding with any specific demands.

To recap on other recent news on the merger, although unconfirmed by Aon, recent reports suggest that the planned divestments in Europe include the sale of reinsurance broker Willis Re, and also WTW’s European insurance units in France, Germany, Holland, and Spain.

Additionally, WTW CRB finpro & cyber specialty based in the UK, alongside WTW units in Italy, Poland and Portugal are reportedly in the mix. WTW Aerospace manufacturing/space has also been noted as part of the package, as is the sale of Aon’s German retirements benefits business.

However, while these proposals could well be enough to appease the EC, it’s important to remember that antitrust concerns have been raised in other parts of the world, notably in the U.S., Australia, New Zealand, and most recently Singapore.

According to sources and a range of reports, the US package could include the sale of WTW CRB in San Francisco in an effort to appease the DoJ, combined with the divestiture of WTW CRB in Houston, and the sale of the WTW Bermuda insurance unit. While WTW Miami, which has witnessed a huge defection of team members to rival broker Lockton and other places in recent times, is also believed to be a target.

As we wrote recently, divestment proposals offered to the EC do not address competition concerns elsewhere in the world, so the need for additional remedies in places like the U.S. and Asia isn’t a surprise.

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