According to a report, insurance and reinsurance giant Aon and its acquisition target Willis Towers Watson (WTW) were both “surprised” by the US Department of Justice (DoJ) filing a lawsuit to try and block their merger.
As we reported last week, the US DoJ has sued Aon and Willis, alleging the pair would become a “broking behemoth” and stifle competition.
Aon and WTW responded, refuting the claims and saying that the US DoJ has failed to understand their business, or the insurance and reinsurance broking landscape, and claiming that their merger will only enhance innovation in the industry and be positive for their clients.
Now, specialist antitrust and mergers and acquisitions (M&A) publisher CTFN has reported that the pair had not been expecting thee lawsuit and that it came as a surprise to them.
This is because, according to CTFN, Aon and WTW did not get invited to the so-called “last rites” meeting with the regulator.
Typically, in advance of launching a lawsuit, the DoJ would invite the merger parties to a meeting to let them know their concerns and warn of a possible lawsuit.
Perhaps this is to give the parties a final chance to come up with some last minute remedies to satisfy the regulator? But in this case the meeting is reported not to have happened.
It could be that the DoJ’s antitrust staff decided that Aon and WTW have spent plenty of time coming up with remedy offers, for a range of international competition authorities, so were unlikely to find a solution that swiftly to negate the need for the legal action.
Which suggests that Aon and WTW need to work relatively quickly to come up with a package of divestitures that are going to satisfy the US DoJ’s concerns, or risk the deal itself not completing.
Which, as we reported last week, is not likely to be the target for Aon, as analysts have suggested that, being so far invested in the acquisition, pushing ahead will be preferable to abandoning the merger with WTW for Aon.
As our sister publication Reinsurance News reported on Friday, Gallagher (AJG) is ready to at least look at, if not snap up, any further divestitures offered in the insurance and reinsurance broking space.
J. Patrick Gallagher, Jr., Chairman, President and CEO at Arthur J Gallagher, said that his company is “wide open” to taking on more businesses should they be offered up as part of a further remedy package.
At the AJG investor day, the Gallagher CEO said the company “would by very well inclined to take on more of their business” if it is offered for sale.
He acknowledged the litigation is a “setback” but said that his firm, AJG, as well as Aon and WTW are all motivated to get the deal’s involved done as quickly as possible.
Previously, reports had suggested that Aon’s acquisition of WTW would receive the necessary approvals from the European Commission (EC) and others very soon, but that now seems less likely and our sources now suggest that other international competition authorities are in a holding pattern after the DoJ’s lawsuit move, waiting to see how that pans out and what remedies are required there, before giving their own go-ahead to the deal.
That was always going to be the case, as antitrust and competition authorities from around the world do tend to work closely together.
We’re also told by a source in Europe that is close to the EC, that its deadline could now be pushed further back than its current schedule of early August, as it is likely to wait on the DoJ to make progress before giving an opinion.
– Divestitures more likely than Aon abandoning Willis deal: Analysts.
– US DOJ sues, says Aon Willis would be “broking behemoth”, parties disagree.
– Aon selling $1.4bn of US retirement units to address US DOJ merger questions.
– US DOJ may not challenge Aon / Willis Towers Watson merger: Report.
– Aon / WTW: Willis Re sale supported, as industry wants broker choice.
– Aon sells German pensions business to LCP, as further step towards WTW merger.
– Aon & WTW agree $3.57bn sale of assets to Gallagher, including Willis Re.
– Gallagher likely buyer of $3bn Aon – Willis (WTW) divestments: Report.
– Aon expected to get conditional WTW acquisition approval from EC: Reuters.
– EC asks for feedback on sale of Aon / WTW assets, as MMC gains talent.
– Aon in proactive offer to US DOJ on Willis Towers Watson merger: Report.
– 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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