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Aon (AON) to Sell Business to Speed Up Willis Towers Buyout

·4 min read

Aon plc AON recently entered into an agreement to divest its pensions consulting, pension insurance broking, pensions administration and investment consulting business in Germany. The businesses will be purchased by Lane Clark & Peacock LLP (LCP), which is a leading, independent, owner-managed pensions, investment and insurance consultancy in the UK and Ireland.

Notably, both Aon and Willis Towers had agreed to sell Willis Re and a set of Willis Towers Watson corporate risk and broking plus health and benefits services to Arthur J. Gallagher & Co. AJG last week. Similarly, their current strategic move is also intended at closing the pending Willis Towers Watson Public Limited Company WLTW buyout. The European Commission has a set of specific queries regarding active businesses and this latest step is in response to that.

Both companies are making earnest efforts to get all the regulatory approvals. The transaction is a foot forward into that direction of completing their pending merger.

Notably, LCP will be able to solidify its position in the pensions consulting and associated services market in Germany with this deal.

On closure of the divestment, the retirement and investment business will be rebranded as LCP. However, the same is contingent on the conclusion of the much-awaited Aon-Willis Towers deal.

The combined entity is expected to deliver revenue growth and margin expansion via provision of better solutions. The consolidation will also lead to better cash flow and earnings growth. Aon expects accretion to its adjusted EPS. Subject to certain conditions, the Aon-Willis Towers Watson deal is expected to be wrapped up in the third quarter of the current year.

Aon and Willis Towers Watson have complementary businesses. Their advanced, technology-powered global platform is anticipated to provide data-driven insights for creating client value.

The merged entity will cater to clients across risk, retirement and health businesses.

Acquisitions and partnerships carve out one of Aon’s main growth trajectories and to this end, the company has already sealed a number of deals over the past three years. Its takeovers chiefly aim at expanding its health and benefits business, flood insurance solutions, and risk and insurance solutions. Strategic collaborations also boost Aon’s capacity, thereby enriching its status as one of the largest insurance brokers.

Insurance brokers are constantly looking for ways to fight the evolving challenges and drive their business portfolios. In this context, these strategic initiatives will be of great help.

Acquisitions in the Same Space

Marsh & McLennan Agency LLC, the middle market agency arm of Marsh & McLennan Companies, Inc MMC, acquired PayneWest Insurance, which is one of the largest independent agencies in the United States. The transaction is in line with the company’s strategy to boost its presence across the United States. It has been making concerted efforts to cater to midsize organizations and individuals for the past many years.

Shares of Aon have rallied 30.5% in a year’s time, underperforming its industry’s increase of 31.4%. It currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Zacks Investment Research