What A Difference A Day Makes

Aon/Willis merger

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What's going on?

A week is a long time in politics, but a day is a long time in business: thats how long it took giant British insurance broker Aon to back out of buying Irish rival Willis Towers Watson.

What does this mean?

Aon which links up insurance buyers and sellers in 120 countries worldwide was forced by strict Irish rules to announce on Tuesday that it was looking at snapping up Willis. Aon stressed that its purchase plans, which wouldve created the worlds biggest insurance broker, were at a very early stage partially explaining its about-face on Wednesday.


Aon said that it wouldve met the $24 billion-plus price tag for Willis by giving its shareholders stock in the new, combined company. But just a day later, the party was canceled.

Why should I care?

For markets: Big deal, big risk, big hurdles.

Shares of Aon dropped 7% on Tuesdays news their biggest fall in a decade before making up some of those losses on Wednesday. And Willis shares shot up 6% before falling back down again. The deal would have been the industrys largest ever: potentially a nice payday for Williss investors, but a challenge for Aon especially since Willis is itself the product of an only three-year-old merger. Thats assuming a deal ever got approved. With Aon the worlds second-largest insurance broker and Willis number three, it mightve been hard to get European regulators in particular on board. They could have forced the companies to sell off parts in order to preserve healthy competition in the insurance market.



Zooming out: Not all attention is good attention.

Willis may have dodged a political bullet: New York state authorities issued Aon with a subpoena on Monday. Theyre demanding documents relating to the US presidents eponymous company which Aon insures as part of a broader investigation into its business practices.

Originally posted as part of the Finimize daily email.

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