investor daily logo

Insurance, advisory giants merge

3 minute read

The multinationals confirmed they would be combining in an all-stock transaction with an implied combined equity value of around $121 billion ($US80 billion).

Willis Towers Watson has merged with Aon, with the aim to combine their businesses into a technology-enable global platform.

The combined company will operate under the Aon name, becoming a global firm focused on risk, retirement and health.

Willis Towers Watson chief executive John Hayley will become the executive chairman of the new company, while Aon chief executive Greg Case and chief financial officer Christa Davies will retain their roles in leading.

The board of directors will comprise members from Aon and Willis Towers Watson.

Mr Hayley said the merger was the “natural next step” to better serve clients across risk and capital.

“This transaction accelerates that journey by providing our combined teams the opportunity to drive opportunity more quickly and deliver more value,” he said.

Mr Case 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 transaction is expected to generate more than $15.1 billion ($US10 billion) in shareholder value creation from the capitalised value of expected pre-tax synergies.

The combined platform generated an approximate revenue $30.4 billion ($US20 billion) and free cash flow of $3.6 billion ($US2.4 billion) in 2019.

Willis Towers Watson and Aon expect the combined firm will deliver mid-single-digit revenue growth, and over the long term, double-digit cash flow growth.

It will have a focus on client value, they said, with its merged management teams both having experience with the integration of large, complex transactions.

Both companies anticipate savings of $406.3 million ($US267 million) in the first full year after merging, and for it to reach $913.3 million ($US600 million) in the second full year and $1.2 billion ($US800 million) in the third.

The transaction, subject to the approval of shareholders and other closing conditions and regulatory approvals, is expected to close in the first half of 2021.

Upon completion, existing Aon shareholders will own around 63 per cent of the combined company on a fully dilated basis and existing Willis Towers Watson shareholders will hold approximately 37 per cent.

Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].