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updated: 3/9/2020 2:24 PM

Aon agrees to purchase Willis Towers in $30 billion deal

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  • Aon Plc, which has U.S. operations based at the iconic Aon Center in downtown Chicago, agreed to buy Willis Towers Watson Plc, which will combine the world's second- and third-biggest insurance brokerages.

    Aon Plc, which has U.S. operations based at the iconic Aon Center in downtown Chicago, agreed to buy Willis Towers Watson Plc, which will combine the world's second- and third-biggest insurance brokerages.
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By Katherine Chiglinsky
Bloomberg

Aon Plc agreed to buy Willis Towers Watson Plc in an almost $30 billion transaction that combines the world's second- and third-biggest insurance brokerages.

The all-stock deal, the largest ever for the industry, comes almost exactly a year after previous talks between the two companies broke down. Aon Chief Executive Officer Greg Case and Chief Financial Officer Christa Davies will lead the combined company, according to a statement Monday.

Brokerages, which help connect businesses looking for coverage with insurers, have been aggressively merging to diversify, boost commissions and serve customers who increasingly want to deal with fewer intermediaries. Marsh & McLennan Cos. the largest broker, bought Jardine Lloyd Thompson Group Plc last year for $5.7 billion. Willis Towers was itself formed in 2016 in an $8.9 billion merger.

The Aon deal "combines two highly complementary businesses into a technology-enabled global platform that is more relevant and responsive to client needs," the companies said in the statement.

Both brokerages have fingerprints in Chicago, with two of the city's tallest structures bearing their names. Aon still maintains U.S. operations at Aon Center, 200 E. Randolph St., after moving its global headquarters to London in 2012, while Willis -- then known as Willis Group Holdings -- obtained the naming rights to the former Sears Tower at 233 S Wacker Drive in 2009 and leased a portion of space in the building.

Under the deal, Willis Towers investors will receive 1.08 Aon shares for each of their shares, with existing Aon investors owning about 63% of the company once the deal is completed. Willis Towers Watson shareholders will get about $231.99 a share in stock. That's 16% higher than the company's closing price on Friday.

Last year, Aon and Willis Towers Watson pulled the plug on a proposed combination less than 24 hours after preliminary talks leaked. A Bloomberg News report thrust the discussions into the public, making it difficult for Aon to move forward because it was still refining the terms of its offer, people familiar with the matter said at the time.

Irish regulations forced the disclosure of early-stage talks last year. Aon said at the time that it reserved the right within 12 months to set aside its announcement that it wasn't intending to pursue a deal. While Aon was restricted from reaching out to Willis for at least a year, Willis was free to approach its pursuer, according to a person familiar with the matter.