Insurance brokerage PLC has agreed to merge with rival Willis Towers Watson an all-stock transaction valued at roughly $30 billion, a year after discussions of a planned takeover fell through.
Shareholders of Willis Towers Watson will receive 1.08 Aon shares for each Willis Towers Watson share, representing a roughly 16% premium to Willis Towers’ Friday closing share price of $199.71.
Aon will own about 63% of the combined company, while existing Willis Towers Watson shareholders will own about 37%.
Aon shareholders will continue to hold the same number of shares in the combined company after the deal’s completion.
The deal combines two “highly complementary businesses” into a technology-enabled global professional services firm focused on risk, retirement and health, the company said.
Aon has a market valuation of $66.8 billion while Willis Towers Watson has a market value of $34.52 billion.
The combined company will be named Aon and maintain its headquarters in London.
John Haley, the chief executive and director of Willis Towers Watson, will become the executive chairman and focus on growth and innovation strategy, Aon said. Aon Chief Executive Greg Case will lead the combined firm alongside Chief Financial Officer Christa Davies.
Aon said the board will comprise a proportional number of board members from both firms.
Aon expects the transaction to be accretive to adjusted per-share earnings in the first 12 months of the combination. The company said it expects to make more than $10 billion from the capitalized value of the combination and about $800 million in cost savings.
The company also expects to immediately generate mid-single digit organic revenue growth or more from the merger. The combined revenue of both Aon and Willis Towers Watson was $20 billion in 2019, according to securities filings.
Insurance brokerages, which help companies buy insurance and advise companies on risk management, are consolidating at a rapid rate following years of sluggish commercial-insurance pricing growth.
The deal is slated to close in the first half of 2021.