The UK’s Competition and Markets Authority (CMA) said this morning that it has ended its investigation into and cleared Arthur J. Gallagher & Co’s (Gallagher) planned acquisition of the Willis Re treaty reinsurance business.
The investigation has been ended as the CMA has decided now further action is required and said it would not send the acquisition through the next stage of its investigatory process, clearing it to proceed.
It was announced in August that Gallagher had reached an agreement to acquire the treaty reinsurance operations of Willis Towers Watson (WTW).
Gallagher said it had reached an agreement with WTW to acquire just the treaty reinsurance broking operations of Willis Re for an initial gross consideration of $3.25 billion; a figure which could rise by another $750 million dependent on certain third-year revenue targets.
Responding to the pending merger of the two reinsurance brokers, the CMA said soon after that it was considering whether this transaction, if successful, could “result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”
The CMA said at the time it had set a deadline to make a phase 1 decision of 29th November 2021.
Now, the CMA has said that, based on the information currently available to it, it has now decided not to refer the AJG and Willis Re merger to a Phase 2 investigation under the provisions of the Enterprise Act 2002.
It’s another step towards the completion of the merger, which will see Gallagher significantly expanding its reinsurance brokerage reach and expertise, while also acquiring a broad suite of analytics capabilities including actuarial services, catastrophe modeling, dynamic financial analysis, rating agency analysis, and capital modeling.
The transaction is anticipated to close either this quarter, Q4 2021, or no later than the end of the first quarter of 2022, subject to regulatory approvals.