Broker Aon could close purchase of NFP in days, well ahead of target
Global insurance broker Aon may be within days of closing its much-watched ca. $13.4 billion cash-and-equity purchase of mid-market broker NFP, some two months ahead of the initial estimate on which it had valued the deal.
“Both Aon and NFP expect the closing to occur on or around April 25, 2024, subject to the satisfaction of the closing conditions specified in the Merger Agreement,” Aon noted as part of a filing to markets. “Until closing, Aon and NFP will continue to operate independently.”
The price tag, pegged to roughly 15x EBITDA earnings, was based on expectation of a June 30, 2024 closing date. Aon had said it would fund the deal through $6.4 billion in Aon stock and $7 billion in cash, for which Aon said it would use fresh debt.
Aon has said it hopes to leverage NFP for a big cross sell opportunities into NFP’s middle market clientele and thus take a payoff from its own recent investments into unit Aon Business Solutions. Analytics, cyber, including the Cyber Quotient Evaluation (CyQu) platform, captives, alternative structures, specialty product support and more could all find new mid-market uses, officials have said.
Aon has used that deal logic in part to comfort its own brokers and those at NFP with assurances that the deal need not force changes or reductions on group producers. NFP will operate as an “independent but connected” entity with no changes in sales force structures.
NFP brings $2.2 billion of 2023 revenue to Aon and a track record for 14% annual growth, including 6% organic growth. Revenues are 48% from health, 35% from commercial risk and 17% from wealth and all tipped towards the US which generates 88% of revenue.
But the deal will prove earnings-dilutive for Aon in 2025 on some $400 million in one-off transaction and integration costs before breaking even in 2026. Revenue synergies start at $80 million in 2026 and hit a long-term run rate above $175 million from 2027. Cost synergies are “modest,” starting at $30 million in 2026 and ramping up to over $60 million after 2027.
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