Aon and Willis Towers Watson Agree to Terminate Merger After DOJ Suit
In March 2021, brokerages Aon and Willis Towers Watson announced their plans to combine in a $30 billion all-stock transaction as a means to accelerate innovation within both organizations to benefit clients.
But by June 2021, the U.S. Justice Department filed a civil suit aimed at stopping the estimated $30 billion acquisition, deeming the transaction a reduction in competition that could lead to higher pricing.
Today the companies announced that they will no longer be pursuing the merger.
In a press release, Aon CEO Greg Case stated: “Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the U.S. Department of Justice.”
Aon and Willis Towers Watson both were strongly in favor of the combination, believing it to be a great step forward for innovation for the brokering community and the customers they serve. However, the DOJ found it to be a tough sell, considering Aon and WTW are both in the top three largest insurance brokerages after Marsh & McLennan.
The brokerages both were prepared to continue forward with the suit with Aon even tapping a team of antitrust partners at Latham & Watkins, which was one of three law firms that advised on the initial merger deal. But it appears that there was no easy way forward.
“The DOJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point,” Case continued.
“Our team’s resilience and commitment are a source of pride and confidence. They have continued to bring to life Willis Towers Watson’s compelling value proposition to better serve our clients in the areas of people, risk and capital,” said Willis Towers Watson CEO John Haley in the same release.
“Going forward, our focus remains steadfast on our colleagues, our clients and our shareholders. We believe we are well-positioned to compete vigorously across our businesses around the world and will continue to introduce important innovations to the market. We appreciate and deeply respect all the Aon colleagues we got to know through this process.”
In connection with the termination of the business combination agreement, Aon will pay a $1 billion termination fee to Willis Towers Watson. Willis Towers Watson’s proposed scheme of arrangement has also lapsed, and both organizations will move forward independently.
Scorecard: Aon and Willis Towers Watson will not be merging after a Department of Justice civil suit challenged the move earlier this year. The companies have mutually agreed to go their separate ways.
Takeaway: Innovation is a big part of the insurance business, but its always important to review just how that innovation could be perceived in the long run, especially if it could potentially limit competition. &