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Insurance brokers WTW and Aon fully scrap their $30Bn merger deal

Insurance brokers WTW and Aon fully scrap their $30Bn merger deal
Insurance brokers WTW and Aon fully scrap their $30Bn merger deal

Insurance brokers Willis Towers Watson (WTW) and Aon have reportedly announced that they have agreed to fully scrap their $30 billion merger deal and also end their legal battle with the United States Justice Department.

According to reports, the merger would have placed Aon, based in London, ahead of Marsh & McLennan, the world's leading insurance broker.

Chief Executive Officer of Aon, Greg Case, stated that despite regulatory progress across the world, including the European Commission's recent approval for the merger, Aon has hit a deadlock with the US Department of Justice.

Now, Aon would be paying WTW approximately $1 billion as termination fees for scrapping the deal.

For the uninitiated, the US Department of Justice (DOJ) had filed a lawsuit against the two in June to stop the merger, claiming that it would limit competition and lead to higher pricing.

The Department of Justice stated that merging the two big insurance brokerage firms would hurt the competitiveness in reinsurance broking, private retiree multicarrier healthcare exchanges, and retirement & pension planning.

Last week, a federal judge had limited the scope of the lawsuit after WTW and Aon agreed to divestitures in order to gain regulatory clearance in the United States and Europe.

The divestitures included Aon's retirement operation and retiree healthcare exchange in the United States and its retirement business in Germany. Apart from the aforementioned, Willis Towers Watson's worldwide reinsurance business was also included in the divestitures. Earlier this month, The merger was approved by EU antitrust regulators, conditioned on some of the sales.

According to a poll conducted by Business Insurance magazine, Aon is ranked second and WTW is ranked fifth among business insurance brokers in the United States. Arthur J Gallagher, Alliant Insurance Services, and Marsh & McLennan are the other major brokers in the United States.

Following the announcement, Aon shares were trading up 4% at approximately $242, while the WTW stock was trading down by 3.5% at more than $218 in premarket trading.

Source credit: https://www.cnbc.com/2021/07/26/insurance-brokers-aon-and-willis-towers-watson-scrap-their-30-billion-merger.html

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