We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
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 (AON) to Acquire Willis Towers in All-Stock Transaction
Read MoreHide Full Article
Aon plc (AON - Free Report) has entered into an agreement with Willis Towers Watson Public Limited Company to merge in an all-stock deal, which is expected to serve clients better. The transaction will likely close in the first half of 2021.
This acquisition is the insurance sector's largest deal, combining the world’s second and the largest insurance brokers.
Details of the Transaction
Per the deal, each Willis Towers shareholder will get 1.08 Aon ordinary shares for every Willis Towers Watson ordinary share. The value reflects a 16.2% premium to Willis Towers’ closing price on Mar 6, 2020. Whereas Aon stockholders would continue to own the same number of ordinary shares in the newly-combined entity.
Shareholders of Aon will own about 63% while Willis investors will hold nearly 37% of the combined company.
Upon closure, the deal is expected to be accretive to Aon’s adjusted EPS in the first year. Moreover, free cash flow accretion of more than 10% after full realization of $800 million of pre-tax synergies is also anticipated.
The deal will enable both companies to continue with their commitment to attain long-term financial goals.
The combined entity will likely carry on with significant growth-related investments after impressive cost savings.
Rationale Behind the Deal
This all-stock merger with combined equity value of approximately $80 billion, overtaking Marsh & McLennan Companies Inc (MMC - Free Report) , is projected to deliver improved outcomes for all shareholders.
The unique blend of the two companies — well-complementing each other — on this advanced, technology-powered global platform is anticipated to provide data-driven insights for creating new sources of client value.
Underpenetrated client demands in areas like cyber, climate risk and delegated investments would be met with the expertise of both houses. In fact, the combined entity will cater to clients across risk, retirement and health businesses.
The deal happened at a time when the market is quite volatile with insurers facing high claims and new threats in the wake of the coronavirus outbreak.
Other Major Acquisitions in the Same Space
Last year Marsh’s purchase of Jardine Lloyd Thompson Group plc for a consideration of $5.6 billion helped it expand its capabilities. The combination of these companies would likely help them combat risks, such as climate change, cybersecurity, etc.
Insurance brokers have been looking for ways to fight the evolving challenges and boost their company portfolios. In this context, these strategic initiatives will be of great help.
Shares of this Zacks Rank #2 (Buy) company have gained 8.6% in a year's time, underperforming its industry's growth of 10.9%. The performance looks subdued when compared with another company’s rally in the same space, which is Brown & Brown, Inc. (BRO - Free Report) , having surged 45% in the same time frame. You can see the complete list of today’s Zacks #1 Rank stocks here.
However, the company’s inorganic growth strategy will likely aid its stock performance to bounce back going forward.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.7% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Aon (AON) to Acquire Willis Towers in All-Stock Transaction
Aon plc (AON - Free Report) has entered into an agreement with Willis Towers Watson Public Limited Company to merge in an all-stock deal, which is expected to serve clients better. The transaction will likely close in the first half of 2021.
This acquisition is the insurance sector's largest deal, combining the world’s second and the largest insurance brokers.
Details of the Transaction
Per the deal, each Willis Towers shareholder will get 1.08 Aon ordinary shares for every Willis Towers Watson ordinary share. The value reflects a 16.2% premium to Willis Towers’ closing price on Mar 6, 2020. Whereas Aon stockholders would continue to own the same number of ordinary shares in the newly-combined entity.
Shareholders of Aon will own about 63% while Willis investors will hold nearly 37% of the combined company.
Upon closure, the deal is expected to be accretive to Aon’s adjusted EPS in the first year. Moreover, free cash flow accretion of more than 10% after full realization of $800 million of pre-tax synergies is also anticipated.
The deal will enable both companies to continue with their commitment to attain long-term financial goals.
The combined entity will likely carry on with significant growth-related investments after impressive cost savings.
Rationale Behind the Deal
This all-stock merger with combined equity value of approximately $80 billion, overtaking Marsh & McLennan Companies Inc (MMC - Free Report) , is projected to deliver improved outcomes for all shareholders.
The unique blend of the two companies — well-complementing each other — on this advanced, technology-powered global platform is anticipated to provide data-driven insights for creating new sources of client value.
Underpenetrated client demands in areas like cyber, climate risk and delegated investments would be met with the expertise of both houses. In fact, the combined entity will cater to clients across risk, retirement and health businesses.
The deal happened at a time when the market is quite volatile with insurers facing high claims and new threats in the wake of the coronavirus outbreak.
Other Major Acquisitions in the Same Space
Last year Marsh’s purchase of Jardine Lloyd Thompson Group plc for a consideration of $5.6 billion helped it expand its capabilities. The combination of these companies would likely help them combat risks, such as climate change, cybersecurity, etc.
Insurance brokers have been looking for ways to fight the evolving challenges and boost their company portfolios. In this context, these strategic initiatives will be of great help.
Shares of this Zacks Rank #2 (Buy) company have gained 8.6% in a year's time, underperforming its industry's growth of 10.9%. The performance looks subdued when compared with another company’s rally in the same space, which is Brown & Brown, Inc. (BRO - Free Report) , having surged 45% in the same time frame. You can see the complete list of today’s Zacks #1 Rank stocks here.
However, the company’s inorganic growth strategy will likely aid its stock performance to bounce back going forward.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.7% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>