We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
AON's USI Deal Drives $13.5B Bond Offering, Draws $65B in Orders
Read MoreHide Full Article
Key Takeaways
Aon launched a seven-tranche $13.5B bond sale to help fund its $17B cash acquisition of USI.
Orders reached about $65B, nearly five times the planned issuance, helping tighten pricing on the debt.
Aon expects the deal to dilute adjusted EPS in 2027, turn accretive in 2028 and lift near-term leverage.
Aon plc (AON - Free Report) moved to lock in financing for its $17 billion cash acquisition of USI Insurance Services, launching a seven-tranche U.S. dollar bond offering, according to Bloomberg. The company is set to raise $13.5 billion through investment-grade notes with maturities stretching from three to 30 years. The financing package could also include a $4 billion term loan.
Aon agreed in August to buy USI from KKR & Co. Inc. (KKR - Free Report) and other shareholders, with closing expected by year-end in 2026. Most of the acquisition-related bonds must be redeemed at 101% of principal if the USI deal is terminated or is not completed by June 1, 2027, although the deadline can be extended by up to six months for outstanding regulatory approvals.
Investor demand made the bond sale notable. Orders reached roughly $65 billion, almost five times the $13.5 billion Aon plans to issue, despite a difficult market backdrop and higher borrowing costs. Strong demand allowed pricing to improve: the spread on the 30-year tranche tightened by 35 basis points from initial discussions to 115 basis points over U.S. Treasuries, per reports.
The offering would be 2026’s second-largest investment-grade bond deal tied to an acquisition, behind Abbott Laboratories’ $20 billion February transaction. That response suggests investors remain willing to finance large, high-quality corporate acquisitions even when broader credit conditions are less favorable.
The USI acquisition significantly expands Aon’s presence in the U.S. middle market, but the debt-funded transaction will push leverage higher in the near term. Fitch placed Aon’s debt on Rating Watch Negative and expects debt to remain roughly four times a measure of earnings through the end of 2027, per reports.
USI brings about $3 billion in annual revenues and gives Aon greater scale among midsized U.S. clients. Aon expects the deal to be dilutive to adjusted EPS in 2027 before becoming accretive from 2028. Near-term capital allocation will likely favor debt repayment over share repurchases after the transaction closes.
Price Performance
AON shares have declined 12.5% year to date compared with the 8.4% fall of the industry.
The consensus mark for CNO Financial’s current-year earnings is pegged at $4.74 per share, which indicates 16.2% year-over-year growth. It has witnessed two upward estimate revisions against none in the opposite direction in the past 60 days. CNO beat earnings estimates in each of the last four quarters, with an average surprise of 23.2%.
The Zacks Consensus Estimate for Assurant’s current-year earnings is pegged at $22.07 per share, which indicates 11.6% year-over-year growth. It has witnessed two upward estimate revisions against none in the opposite direction in the past month. AIZ beat earnings estimates in each of the last four quarters, with an average surprise of 17.7%.
View the Zacks #1 Rank List
Image: Bigstock
AON's USI Deal Drives $13.5B Bond Offering, Draws $65B in Orders
Key Takeaways
Aon plc (AON - Free Report) moved to lock in financing for its $17 billion cash acquisition of USI Insurance Services, launching a seven-tranche U.S. dollar bond offering, according to Bloomberg. The company is set to raise $13.5 billion through investment-grade notes with maturities stretching from three to 30 years. The financing package could also include a $4 billion term loan.
Aon agreed in August to buy USI from KKR & Co. Inc. (KKR - Free Report) and other shareholders, with closing expected by year-end in 2026. Most of the acquisition-related bonds must be redeemed at 101% of principal if the USI deal is terminated or is not completed by June 1, 2027, although the deadline can be extended by up to six months for outstanding regulatory approvals.
Investor demand made the bond sale notable. Orders reached roughly $65 billion, almost five times the $13.5 billion Aon plans to issue, despite a difficult market backdrop and higher borrowing costs. Strong demand allowed pricing to improve: the spread on the 30-year tranche tightened by 35 basis points from initial discussions to 115 basis points over U.S. Treasuries, per reports.
The offering would be 2026’s second-largest investment-grade bond deal tied to an acquisition, behind Abbott Laboratories’ $20 billion February transaction. That response suggests investors remain willing to finance large, high-quality corporate acquisitions even when broader credit conditions are less favorable.
The USI acquisition significantly expands Aon’s presence in the U.S. middle market, but the debt-funded transaction will push leverage higher in the near term. Fitch placed Aon’s debt on Rating Watch Negative and expects debt to remain roughly four times a measure of earnings through the end of 2027, per reports.
USI brings about $3 billion in annual revenues and gives Aon greater scale among midsized U.S. clients. Aon expects the deal to be dilutive to adjusted EPS in 2027 before becoming accretive from 2028. Near-term capital allocation will likely favor debt repayment over share repurchases after the transaction closes.
Price Performance
AON shares have declined 12.5% year to date compared with the 8.4% fall of the industry.
Zacks Rank & Key Picks
AON currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Finance space are CNO Financial Group, Inc. (CNO - Free Report) and Assurant, Inc. (AIZ - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus mark for CNO Financial’s current-year earnings is pegged at $4.74 per share, which indicates 16.2% year-over-year growth. It has witnessed two upward estimate revisions against none in the opposite direction in the past 60 days. CNO beat earnings estimates in each of the last four quarters, with an average surprise of 23.2%.
The Zacks Consensus Estimate for Assurant’s current-year earnings is pegged at $22.07 per share, which indicates 11.6% year-over-year growth. It has witnessed two upward estimate revisions against none in the opposite direction in the past month. AIZ beat earnings estimates in each of the last four quarters, with an average surprise of 17.7%.