Broking giants Aon and Willis to merge

Aon and Willis Towers Watson are set to merge under the Aon name following confirmation of an agreement to combine in an all-stock transaction with a combined equity value of approximately $80bn. The deal is expected to bring savings of $800m over three years.

John Haley, WTW CEO commented that “the combination of Willis Towers Watson and Aon is a natural next step in our journey to better serve our clients in the areas of people, risk and capital. This transaction accelerates that journey by providing our combined teams the opportunity to drive innovation more quickly and deliver more value."

Greg Case, AON CEO added: "This combination will create a more innovative platform capable of delivering better outcomes for all stakeholders, including clients, colleagues, partners and investors. Our world-class expertise across risk, retirement and health will accelerate the creation of new solutions that more efficiently match capital with unmet client needs in high-growth areas like cyber, delegated investments, intellectual property, climate risk and health solutions."

The new company will remain located in London and be called Aon. Haley will take on the role of executive chairman with a focus on growth and innovation strategy. The combined firm will be led by Case and Aon chief financial officer, Christa Davies. The board of directors will comprise proportional members from Aon UK and WTW's current directors.

Aon UK has forecast annual pre-tax synergies and other cost reductions of $800m by the third full year of the combination. Approximately 73% of this will come from the consolidation of business and central support functions, including leveraging the capabilities of the Aon Business Services operational platform across the combined group; and 27% from the consolidation of infrastructure related to technology, real estate and third-party contracts.

WTW and Aon UK anticipate savings of $267m in the first full year of combination, reaching $600m in the second full year, with the full $800m achieved in the third full year.

The Proposed Combination is expected to generate over $10bn of shareholder value creation from the capitalized value of the expected pre-tax synergies, based on the blended 2020 price to earnings ratio of WTW and Aon UK on 6th March 2020, net of $2bn in one-time transaction, retention and integration costs.

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