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Aon, Willis Cancel $30B Merger in Light of DOJ Probe

Aon PLC and Willis Towers Watson – the world’s second and third largest insurance brokers- said on Monday that they will withdraw from a $30 billion merger in the face of the U.S. Department of Justice’s antitrust challenge to the transaction.

AonPhoto Credit: Shutterstock

The two insurance giants said in a joint statement that despite signs of progress last week over a potential agreement, negotiations had reached an “impasse” with the DOJ.

The deal, announced in March 2020,  would have seen two of the “Big Three” insurance brokers merging to form a combined $80 billion multinational entity.

“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,” Greg Case, Aon’s chief executive, said. “The DOJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy.”

Case also stated that Aon was “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.”

The company said it had reached a mutual agreement with Willis Tower over the decision to withdraw and terminate the merger. However, Aon also noted it will pay a $1 billion termination fee to Willis as a result of the deal’s collapse.

The European Commission gave conditional approval to the deal early this month, on the condition that Willis Towers sold off its reinsurance broking arm and other smaller business units to rival Arthur J. Gallagher — a deal that would total $3.57 billion.

But regulators at the DOJ then sued in a move to prevent the two companies from ever joining forces.

The DOJ said the proposed merger would lower competition and leave American consumers with higher prices, fewer choices, and lower-quality services.

Chief Executive of Willis Towers, John Haley, said the businesses would remain a leader in the industry.

“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,” he said. “We appreciate and deeply respect all the Aon colleagues we got to know through this process.”

U.S. Attorney General Merrick B. Garland described the decision to abandon the merger as “a victory for competition and for American businesses, and ultimately, for their customers, employees and retirees across the country. The decision to abandon this anticompetitive merger will help preserve competition in insurance brokering.”

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Source: https://www.law360.com/articles/1406449

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