Aon will merge with rival Willis Towers Watson, an all-stock transaction worth $30 billion, to form the biggest insurance broker in the world, the company said Monday.
The combined companies, which will formally be called Aon, will maintain headquarters in London and be worth roughly $80 billion. Willis, also known for its consulting and outsourced CIO services for institutional investors, is London-based, too. The decision comes after previous plans to merge the businesses were scrapped in March 2019 after leakage of the buyout reached the press.
But the merger will allow the two companies to overtake Marsh & McLennan as the top global insurance broker. As of Monday, Marsh, a New York City firm, had a $50 billion market cap.
Willis Towers Watson’s chief executive, John Haley, will act as executive chairman of the two companies. The combined business will be led by Aon’s chief executive, Greg Case, and Aon’s chief financial officer, Christa Davies.
The acquisition comes as insurers eye new markets for growth, including burgeoning opportunities in cybercrime prevention, delegated investments in pensions or endowments, intellectual property, climate risk, and health solutions.
But the announcement also came on one of the worst days in US equity markets, which plummeted 7% early in Monday trading, going into freefall when the price of crude tanked over the weekend, and triggered a temporary halt to trading. The stock price for Aon tumbled 16% to $181 per share during trading. Willis Towers fell 8% to $184 per share.
The merger, which was locked in on the March 6 close, will give Aon shareholders 63% of the new company, while Willis Towers shareholders will own 37%. The board of directors will proportionally comprise current directors from both companies.
Total revenue for Aon was $11 billion in fiscal year 2019, while Willis Towers generated $9 billion, according to recent documents.
The transaction is expected to close in 2021.