Willis Towers Watson is being broken up, with parts of the business being sold to Arthur J Gallagher & Co (AJG) to help facilitate its acquisition by Aon.
A spokesperson for AJG confirmed it will not acquire any of Willis’ captives-related operations as part of the deal. But it is acquiring a substantive part of its reinsurance, specialty and retail brokerage operations, in a $3.5 billion deal expected to close during the second half of 2021.
The operations include certain of Willis Re's treaty and facultative reinsurance brokerage operations and certain UK specialty, European and North American brokerage operations. The combined units generated $1.3 billion of estimated pro forma revenue and $357 million of estimated pro forma EBITDAC for the year ended December 31, 2020.
It is hoped the deal will help Aon secure a green light from concerned regulators. A number have expressed antitrust-related worries relating to the deal, most notably the European Commission. In April, the two brokers said they were developing a remedy proposal to alleviate these concerns.
The European Commission was reported to be on the verge of publishing a statement outlining all its fears. This prompted the firms to prepare a package of remedies designed to negate the need for this to be published at all.
The proposed deal is subject to European Commission, US Department of Justice and other regulatory approvals, including regulatory approvals related to the pending Aon and Willis Towers Watson combination and the proposed remedy. That could mean the regulators may still have an important say on the future of all three businesses.
"This acquisition will accelerate our long-term strategy by significantly expanding our global value proposition in reinsurance, broadening our retail brokerage footprint and strengthening key niches and specialty brokerage offerings," said J. Patrick Gallagher, AJG’s chairman, president and chief executive officer.
Willis Towers Watson, Arthur J Gallagher, J. Patrick Gallagher