EC clears Aon’s acquisition of Willis Towers Watson with conditions

In a significant step for the merger process, the European Commission has cleared insurance and reinsurance broking giant Aon’s acquisition of rival Willis Towers Watson, but with conditions attached.

“The approval is conditional on full compliance with a substantial set of commitments offered by Aon, including the divestment of central parts of WTW’s business to the international brokerage company Arthur J. Gallagher,” the EC has explained.

Adding, “The commitments will strengthen Gallagher in its capabilities in reinsurance and commercial risk brokerage and improve its footprint in the European Economic Area (‘EEA’). It will thus become a credible alternative to the combined entity post-transaction.”

Executive Vice-President Margrethe Vestager, in charge of competition policy at the EC, commented, “European companies rely on brokers to obtain best possible solutions to manage their commercial risk. Aon and Willis Towers Watson are leading players in the insurance and reinsurance brokerage markets. The remedy package accepted by the Commission ensures that European companies, including insurance companies and large multinational customers, will continue to have a good choice and good services when selecting a broker suitable for their needs.”

The divestments offered all answer the EC’s concerns about corporate risk and commercial insurance broking, reinsurance broking and pension administration in Germany.

As a result, the EC said the merger can proceed once it has formally assessed and approved Gallagher as suitable purchaser of the divestment busines.

And, “The Commission’s decision is conditional upon full compliance with the commitments.”

As a reminder, Aon & WTW agreed a $3.57bn sale of assets to Gallagher, including Willis Re and this also answers the EC’s concerns on commercial insurance broking.

Aon also said it would sell its German pensions business to LCP, as a  further step towards the WTW merger designed to assuage the EC’s concerns.

These are both slated for completion, but now possibly reliant on the progress being made in the United States, where the antitrust division of the Department of Justice could slow the process.

But with this hurdle overcome, this is a significant step in the right direction for Aon and Willis Towers Watson.

So it now appears crucial to gain approval in the U.S. and perhaps more quickly than the current schedule set appears to provide for, so that the divestments to Gallagher can proceed and the EC then give its final nod that this can go ahead.

Aon and Willis Towers Watson responded to the EC’s announcement saying, “This is a major step that demonstrates continued progress toward obtaining regulatory clearances for the proposed combination.

“Both firms operate across broad, competitive areas of the economy and believe this approval affirms that our proposed combination will accelerate innovation on behalf of clients, creating more choice in an already dynamic and competitive marketplace.”

The pair also noted that consummating the merger remains dependent on approval in other jurisdictions, including the United States.

Also read:

– Aon – Willis offered earlier US trial, but still past merger outside date.

– Failure of WTW merger over US DoJ trial date “unacceptable” – Aon.

– South Africa adds to Aon Willis merger divestiture load.

– Aon – Willis Towers Watson merger review by Singapore to deepen.

– Aon & WTW “surprised” by DoJ lawsuit. Gallagher ready to snap up divestitures.

– 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.