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Aon and Willis Break Off Merger

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What You Need to Know

  • Aon appears to owe Willis a $1 billion termination fee.
  • The U.S. attorney general says competition between Aon and Willis helps hold the cost of health and retirement benefits consulting down.
  • The Aon-Willis breakup will likely affect Gallagher's deal for Willis Re.

Aon and Willis Towers Watson have mutually agreed to end their proposed combination and end litigation with the U.S. Department of Justice (DOJ).

This news comes less than a week after the European Commission had signaled it would approve the merger, although further divestments were required.

“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 CEO Greg Case said in a comment in the breakup announcement.

“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,” he said.

Noting the Justice Department filed its antitrust suit as a measure to protect American consumers and businesses, Attorney General Merrick B. Garland said in a a statement: “American companies and consumers rely on competition between Aon and Willis Towers Watson to lower prices for crucial services, such as health and retirement benefits consulting. Allowing Aon and Willis Towers Watson to merge would reduce that vital competition and leave American customers with fewer choices, higher prices and lower quality services.”

As laid out in the business combination agreement, Aon will pay Willis a $1 billion termination fee.

The deal had a value of about $30 billion.

In the the termination announcement, Willis CEO John Haley said: “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.”

As the Aon-Willis deal terminates, so does the $3.57 billion acquisition of Willis Re by Arthur J. Gallagher Co. The transaction with Gallagher, which also included Willis’s specialty and retail brokerage operations, was contingent on consummation of the Aon-Willis combination.

(Image: Sergey Nivens/Shutterstock)