Daily Management Review

EU To Oppose Aon's $30 Billion Acquisition Of Insurance Broker Willis: Reports


EU To Oppose Aon's $30 Billion Acquisition Of Insurance Broker Willis: Reports
The acquisition of Willis Towers Watson by Aon in a deal worth $30 billion is likely to face opposition from the antitrust watchdog of the European Union and is likely to present a list of objections which Aon will have to satisfy through concessions in order to get the deal through, said reports quoting sources with knowledge of the  matter.
This objection could also potentially delay the plans of Aon to complete the deal by the first half of the current year unless substantial concessions are offered by it to get6 the deal through within the coming weeks, said the reports quoting the sources. 
If the deal, which was announced almost a year ago, foes through the resultant entity would be the largest insurance broker of the world and would be larger in combined size than the current market leader Marsh & McLennan Companies Inc.
With a drop in valuations, firms trying to boost their business models, increasing insurance claims because of the Covid-19 pandemic and a host of other issues such as climate change has in recent times forced a series of consolidations in the global insurance industry.
There are concerns within the European Commission that the acquisition will result in increase of insurance of prices for and become a road block for innovation. last month, the Commission had suspended its investigation into the deal to allow time to Aon to provide information requested  by it.
There were no comments available from the EU enforcer and Aon.
According to the reports quoting source information, a statement of objections which is a sort of a charge sheet setting out possible competitive harm, is being prepared by the Commission.
Typically about two weeks’ time is given to companies to respond while they also have the right to request a closed-door hearing.
Offering significant concessions to address EU regulators’ concerns is one of the ways for Aon to stave off the charge sheet. While the company has not made an official offer to date, sources reportedly said that it has been in informal discussions about concessions.
Divestment of Willis’ reinsurance business has been demanded by the EU enforcer but which has been refused by Aon. According to reports, the Commission is also looking to see whether the companies might have to sell the global coordination of employee benefits broking and consultancy services.
According to the reports, it would not be easy for Aon and the Commission to find the right concessions that would satisfy large multinational clients – which is one of the key aims of the questionnaires that the Commission sent to rivals and customers.
“In order for a fourth competitor or third competitor to merge, they would need to replace Willis. Replacing Willis means replacing Willis’ footprints, their data analytic skill abilities, their cross risk capability, these are really expensive, hard things to build,” one of the sources was quoted as saying in one of the reports.