Aon to sell $4.3bn business to Blackstone
Aon has signed a definitive agreement to sell its benefits administration and HR business process outsourcing (BPO) platform for a cash consideration of $4.3 billion to Blackstone, a private equity and alternative asset management corporation.
Depending on future performance, an additional consideration of up to $500 million may be included after the deal closes, the company said in a statement reporting its 2016 results.
The total after-tax cash proceeds are expected to be approximately $3 billion. The deal is expected to close by the end of the second quarter of 2017.
"This transaction reinforces Aon's position as the leading, global professional services firm focused on risk, retirement and health," said Greg Case, president and CEO of Aon.
"The sale of our outsourcing platform creates incremental capital to strengthen growth in core operations, and accelerates the pursuit of inorganic growth opportunities that address emerging client needs, similar to recent acquisitions in cyber risk advisory and health brokerage solutions."
Aon expects the transaction to improve its return on invested capital due to effective deployment of free cash flow from operations and transaction proceeds, savings from operating model improvements, and a lower effective tax rate.
In 2016, net income attributable to Aon shareholders increased 1 percent to $1.4 billion compared to the prior year.
Total revenue for 2016 was $11.6 billion. It was impacted by a 2 percent decrease in commissions and fees related to divestitures, net of acquisitions, and a 2 percent unfavourable impact from foreign currency translation.
In the fourth quarter of 2016, net income attributable to Aon shareholders was $502 million, down from $584 million in the same period a year ago.
"We ended 2016 in a strong position, driving positive performance across each of our key metrics for both the fourth quarter and the full year, highlighted by growth across every major business and record operating margin in Risk Solutions," Case said.
"Substantial investments in high-growth areas of our industry-leading platform, improved operational performance, and record free cash flow generation of more than $2.1 billion, continue to position the firm for increased shareholder value creation over the long-term."
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