Aon buys Willis Towers Watson for $30bn

Latham, Freshfields, Weil and Skadden all get a piece of the action.

Posted Tuesday, March 10th 2020
Aon buys Willis Towers Watson for $30bn

Aon has agreed to buy Willis Towers Watson for $30 billion, creating the world’s largest insurance broker.

 

Retaining the name of Aon and being headquartered in London, the new company – worth $76 billion – will be 63% owned by existing Aon shareholders. Willis Towers Watson’s share price has fallen by 10% in the current virus-affected market conditions.

 

According to the deal terms, Aon, which anticipates $800 million worth of cost synergies from the acquisition, will have to pay Willis Towers Watson $1 billion if the deal falls through. And it might: the shareholders of both companies won’t be voting on the merger until this autumn at the earliest.

 

Aon was in merger talks with Willis last year, but the plans were set aside 12 months ago, potentially due to competition concerns. The two brokers are the second- and third-largest in the market; now, their main competitor will be current market-leader Marsh & McLennan, which bought Jardine Lloyd Thompson for £4.3 billion last year.

 

Those competition concerns aren’t surprising: Aon and Marsh & McLennan will have revenues of $19 billion and $17 billion respectively, while Arthur J Gallagher – their closest competitor – will be pulling in $5 billion.

 

This the culmination of a 25-year history of mergers for Willis Towers Watson, which was created four years ago by the combination of Towers Watson and Willis Group. Towers Watson was formed in 2010 by the merger of Towers Perrin and Watson Wyatt, which was itself formed in 1995 by the merger of R. Watson & Sons and The Wyatt Company. Willis Towers Watson’s CEO John Haley, who was due to retire next year, will be the new company’s executive chairman.

 

Aon instructed Charles Ruck and Bradley Faris at Latham & Watkins in the US; Julian Long at Freshfields Bruckhaus Deringer in the UK; and Cian McCourt at Arthur Cox in Ireland.

 

In the US, Willis Towers Watson instructed Michael Aiello at Weil, Gotshal & Manges, and Joseph Coco, Todd Freed and Blair Thetford at Skadden, Arps, Slate, Meagher & Flom. In Ireland, it instructed Matheson partners David Fitzgibbon, David Jones and Tim Scanlon.

 

Legal advisor to Aon: Latham & Watkins (US), Freshfields Bruckhaus Deringer (UK), Arthur Cox (Ireland)

Financial advisor to Aon: Credit Suisse

Legal advisor to Willis Towers Watson: Weil, Gotshal & Manges (US), Skadden, Arps, Slate, Meagher & Flom (UK), Matheson (Ireland)

Financial advisor to Willis Towers Watson: Goldman Sachs