Aon shares close 8 percent up as CEO Case lambasts DoJ
Investors appear to remain confident regarding Aon’s future trading prospects, despite the collapse of its much-feted merger with Willis Towers Watson (WTW), with its share price closing 8 percent up yesterday, By comparison, WTW shares ended the day some 9 percent down.
The deal collapsed on July 26, 2021, under the pressure of the ongoing investigation launched by the US Department of Justice (DoJ). Aon and WTW said they had decided to end the DoJ’s litigation rather than face a lengthy court battle.
In a lawsuit filed in June to block the transaction, the DoJ had offered a scathing critique of the proposed merger. The deal, it suggested, would create a “Big Two” in insurance broking and would “eliminate substantial head-to-head competition and likely lead to higher prices and less innovation, harming American businesses and their customers, employees and retirees”.
A judge had decided the trial would start in November , two months later than Aon and Willis had wanted. That would have pushed completion of the deal beyond the third-quarter target.
In a message to Aon staff, CEO Greg Case (pictured) accused the DoJ’s stance of being “remarkably out of step with the rest of the global regulatory community”, adding that while the firm was confident of a win in court, “the current course with DoJ would have likely taken us well into 2022”.
“At best, DoJ’s perspective demonstrates a fundamental misunderstanding of the marketplace. At worst, our combination was blocked by poor timing and other factors outside our control,” Case said.
“Ultimately, our decision was clear: we simply will not compromise colleague and client priorities to close the combination.”
On the other side of the fence, US Attorney General, Merrick B Garland, hailed the collapse of the deal as a “victory for competition and for American businesses and, ultimately, for their customers, employees and retirees across the country”.
“American employees and retirees rely on dependable healthcare and retirement plans provided by their employers. Many of those employers, in turn, rely on insurance brokers such as Aon and Willis Towers Watson for managing the complexities of these health and retirement benefits,” he added.
“Businesses also rely on Aon and Willis Towers Watson to compete for the bulk of their risk management portfolio, including property and casualty insurance. The decision to abandon this anti-competitive merger will help preserve competition in insurance brokering.”
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