In March 2020, Aon announced plans to buy Willis Towers Watson for an all-stock transaction
The $30 billion proposed merger of two of the world’s largest insurance consultancies has been scuttled by an anti-trust lawsuit. The deal between Willis Towers Watson and Aon would have created the world’s largest broker, something which the US Department of Justice believes violated competition law.
In March 2020, Aon announced plans to buy rival Willis Towers Watson for an all-stock transaction. The news promised to draw to a conclusion a year-long saga, 12 months after talks between the two companies collapse amid leaked negotiations.
The proposed deal between Willis Tower Watson and Aon looks to have finally caught the attention of competition watchdogs, however, and in June it emerged the US Department of Justice (DoJ) had moved to block the deal.
The DoJ’s antitrust division called for a legal halt to the merger, as it asserted that if Willis Towers Watson were to become part of Aon, the insurance consulting industry would see its current Big Three of Aon, Willis Towers Watson and Marsh & McLennan become “the Big Two.” This, the regulator argued, was something which would be bad for market competition, as the sector’s customers – companies, pension funds and retirees who rely on insurance brokers – would have less choice regarding services and pricing.
A month after the DoJ launched its lawsuit, the delays have seen Aon and Willis Towers Watson call off their $30 billion merger altogether, claiming the US regulators’ objections as having created unacceptable delay and uncertainty. The news sees Aon pay Willis a $1 billion termination fee, while Willis Towers Watson said this would allow it to boost share repurchases by $1 billion.
Aon Chief Executive Greg Case commented, despite regulatory momentum around the world we reached an impasse with the U.S. Department of Justice. He also suggested the DoJ had taken a position that overlooks that our complementary businesses operate across broad, competitive areas of the economy.