Double gaffe

9 March 2020 By Robert Cyran Follow @rob_cyran

Investor skepticism quickly torpedoed the insurance broker’s idea, exactly a year ago, of buying rival Willis Towers Watson. Now the two have signed a deal – and it still looks unrewarding for Aon’s owners. Announcing it amidst market virus panic adds insult to injury.

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U.S. listed insurance broker Aon, with a market capitalization of $50 billion on March 6, said on March 9 it had agreed to buy Willis Towers Watson in an all-stock deal worth about $30 billion at Aon’s closing stock price on March 6, the last day of trading before the news was announced.

Willis shareholders will receive 1.08 Aon shares for each share held. That’s a premium of 16% to Willis’ closing price on March 6. Following the transaction, Aon shareholders will hold about 63% of the combined firm, and Willis shareholders approximately 37%.

One year ago, Aon said it was in early-stage negotiations with Willis. Aon shares fell 8% on that news, and the company said the following day that it was scrapping the plans.

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