As global insurance and reinsurance broker Aon looks forward after its failed merger with rival Willis Towers Watson (WTW), Chief Executive Officer (CEO) Greg Case has told the Financial Times that the firm has emerged stronger.
Aon and WTW decided to terminate their proposed $30 billion combination last month after reaching an impasse with the antitrust division of the U.S. Department of Justice (DoJ), which had filed a civil lawsuit to block the merger amid fears it would stifle competition.
On an earnings call following the release of a positive set of second quarter 2021 financial results, Aon’s CEO Case stressed that the deal could have been closed, but only on terms that would have been damaging to the firm.
Now, speaking with the Financial Times, Case has defended his firm’s failed takeover of WTW, saying that the logic of the deal rejected by the DoJ is “as strong today as it has ever been.”
Initially, the proposed transaction was investigated over competition concerns across the world, notably in Europe and the U.S., but also in Singapore, Australia, New Zealand and elsewhere.
In early July, the European Commission (EC) approved the deal on the basis Aon fully complied with a substantial set of commitments, which included the sale of Willis Re and other WTW assets to broker Gallagher.
“We know our industry, it’s incredibly competitive in every way, our clients have tremendous options and we were about trying to give them even more options. We were well advised from the beginning,” Case told the Financial Times.
But while the greenlight from the EC was viewed as a positive step and led industry commentators to expect the deal to be approved in other jurisdictions, the DoJ disagreed and was subsequently set for a potentially lengthy trial with Aon and WTW.
At the end of the day, Aon and WTW opted against both trial and a further set of remedies, with Case previously stating that these options were simply “not the right answer” and “candidly would have damaged our client serving capabilities and as we described before, stifled innovation.”
The collapse of the deal also saw Gallagher’s agreement to acquire certain WTW assets break down, although the company has since reached an agreement to acquire just the treaty operations.
In line with the terms of the agreement, Aon has paid a $1 billion termination fee to WTW, and expects additional costs of around $400 million.
But despite the failure of the WTW deal, Case told the Financial Times that the firm has not been put off dealmaking in the future.
“We’ve always had a strong pipeline and we’ll continue to have a strong pipeline — but we’ll also trade off against organic investments as well,” said Case.