Aon in proactive offer to US DOJ on Willis Towers Watson merger: Report

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It’s been reported that insurance and reinsurance broker Aon made a proactive remedy offer to the US Department of Justice Antitrust Division regarding its impending acquisition of Willis Towers Watson (WTW), as it sought to get on the front-foot of negotiations.

aon-willis-towers-watsonAs we reported earlier this week, it’s expected that the US Department of Justice (DOJ) will have its own set of concerns and demands specific to the combination of Aon and Willis Towers Watson’s (WTW) operations in the United States.

These are said to have included specific WTW Corporate Risk & Broking units in San Francisco, Houston and Miami, as well as the WTW broking business in Bermuda.

As we noted, these reported US DOJ related divestitures would get nowhere near to the merger cap set in the deal, so it does seem to us that the US antitrust authorities demands may come on the heels of the EC and also be dependent on that package being accepted by the merger parties Aon and WTW.

However, specialist publisher CTFN, which deals in antitrust and competition related issues, has reported that its sources say Aon made a proactive remedy proposal to the US DOJ, as it sought to provide a baseline for negotiations.

Part of the problem with these merger negotiations with competition authorities is that the information leaking out often comes from sources that have vested interests and it’s always hard to know which side instigated a certain offer, demand or phase of negotiations.

In this case, it seems Aon may have been proactive with the US DOJ and we’d imagine pushed a set of remedy or concession proposals in front of the Antitrust Division which would have been designed to be additive to those pushed to the European Commission, in an attempt to assuage any concerns that it will gain undue competitive dominance in any area after combining with the Willis Towers Watson business.

CTFN reports that the typical back and forth of these types of negotiations has yet to begin with the DOJ, but that its staff are engaged in taking depositions from senior company officials, which is seen as a preparatory step for remedy negotiations to begin.

In other words, the US DOJ is ensuring it has all the information it needs, while also reportedly having an offer on the table from Aon as a starting point, before launching into full negotiation over how to find an agreement to get the deal done.

Analysts continue to report that Aon is motivated to get the deal done, even at significant divestiture cost.

However, there must be a limit to this, both in terms of amount, effort and time taken to come to an agreement.

At this stage, if Aon has proactively reached out with a divestiture package proposal to the US DOJ, we’d imagine it has also done the same in any other regions where it feels a divestment, or concession, is needed to remedy the situation and move forwards with its planned WTW merger.

That means competition authorities in other regions that have raised concerns, or sought market feedback, may also have some kind of offer on the table. All of which should at least help to speed the process for Aon, which is likely becoming an increasingly important consideration for the company at this stage.

Also read:

Aon – Willis Towers Watson divestiture reports expand to US & Bermuda.

EC extends Aon – Willis Towers Watson merger deadline again.

Aon – Willis Towers Watson merger deadline pushed back by EC.

Aon – Willis Towers Watson merger assessed by Singapore competition authority.

Aon & Willis Towers Watson merger may face EC statement of objection: Reuters.

Aon & Willis Towers Watson merger to “significantly lessen competition”.

Aon & WTW cite alt. capital, disintermediation & marketplaces in defence of merger.

Aon & Willis Towers Watson reveal leadership of combined company.

Willis Re divestment seen necessary for Aon – WTW merger to complete.

If Aon / WTW leads to divestitures, AJG seen as “best fit” for Willis Re: KBW.

EC investigates Aon / WTW deal, cites competition “concerns”.

Aon + WTW to “extend proven model of catastrophe bonds” – CEO’s Case & Haley.

Aon & Willis Towers Watson to merge.

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