Financial services firms Aon and Willis Towers Watson (WTW) have agreed to terminate their M&A deal and end litigation with the US Department of Justice (DoJ).
The proposed $30bn (£21.3bn, €24.7bn) acquisition was first announced on 9 March 2020, but it suffered regulatory backlash around the world.
In connection with the termination of the business combination agreement, Aon will pay a $1bn termination fee to Willis Towers Watson.
WYW’s proposed scheme of arrangement has now lapsed, and both organisations will move forward independently.
They will provide further financial updates and outlooks on their respective Q2 2021 earnings calls, on 30 July for Aon and 3 August for Willis Towers Watson.
‘Impasse’
Greg Case, Aon chief executive, said: “Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the US Department of Justice. The DoJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy.
“We are 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.”
John Haley, Willis Towers Watson chief executive, said: “Our team’s resilience and commitment are a source of pride and confidence. They have continued to bring to life Willis Towers Watson’s compelling value proposition to better serve our clients in the areas of people, risk and capital.
“Going forward, our focus remains steadfast on our colleagues, our clients and our shareholders. 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. We appreciate and deeply respect all the Aon colleagues we got to know through this process.”
Regulatory scrutiny
The deal was scrutinised heavily over the last 18 months due to the competition issues it would have created.
On 21 Dec 2020, the European Commission (EC) confirmed it had opened an in-depth investigation to assess the merger and, at the same time, the Australian Competition & Consumer Commission (ACCC) took aim at the deal.
Then, the DoJ filed a civil lawsuit on 16 June 2021 against Aon to stop the acquisition of Willis Towers Watson and said the transaction would bring together two of the ‘big three’ global insurance brokerage firms.
In its complaint, the DoJ alleged that the merger threatened “to eliminate competition, raise prices, and reduce innovation for American businesses, employers, and unions that rely on these important services”.
In a bid to appease regulators, Aon sold its retirement business in the US and also its pensions consulting, pension insurance broking, pensions administration and investment consulting business in Germany.
Earlier this month, The EC gave the green light to the M&A deal after Aon agreed to a “remedy package”.
But the US did not budge from its position and now the deal has collapsed.
