The largest broker in the world won’t be forming due to delays from US regulator objections.
Aon Plc (NYSE stock symbol AON) and Willis Towers Watson Plc (NASDAQ stock symbol WLTW) have announced that they are calling off their planned $30 billion insurance merger.
Had the two companies joined together, they would have become the largest insurance broker in the world.
According to the companies, the insurance merger faced an unacceptable delay and level of uncertainty due to US regulator objections. The deal had been initially announced in March 2020. At that time, it had already addressed European and other antitrust concerns. However, it still found itself facing a dead halt in June 2021, when the US Department of Justice (DOJ) sued to stop it. The agency argued that a marketplace of that size would shrink competition and raise prices.
The insurers said that they would cease existing litigation with the DOJ, and that AON would pay Willis a $1 billion termination fee. The impact financially and in timing of the payment was not made immediately clear at the time of the initial announcement. Aon will be reporting its second quarter results at the end of this week.
The choice to give up on the insurance merger was made due to the risk of an extended trial process.
Aon predicted that the trial process with the DOJ could have lasted nine months and would have pushed the closure of the deal well into next year. This was the case even after last week when a federal judge decided to narrow the trial’s scope of issues, said a Reuters report citing an anonymous source familiar with the matter.
Other issues also remained in the way of the deal, including whether large US clients would experience a competition reduction when purchasing two types of coverage: health-and-benefit coverage for employees; and property, casualty and financial risk coverage, said an order US District Judge Reggie Walton signed on July 20.
These additional challenges in the insurance merger threatened insurer clients and employees because the companies aren’t organized by the size of their clients, which meant that selling parts of their businesses would be challenging, said the Reuters source.