Arthur J Gallagher has confirmed that a deal to buy Willis Towers Watson’s retail brokerage operation and reinsurance assets will not go ahead, following the termination of the Aon and WTW merger yesterday.
Initially it had been proposed that WTW would assets worth $3.57bn to Gallagher in a bid to satisfy competition regulators in Europe.
At the time Aon and WTW said the proposed sale “resolves questions raised by the EU and is intended to address certain questions raised by regulators in other jurisdictions.”
This proposed acquisition was seen as positive for Gallagher, with analysts noting that it competitive price paid for these additional assets.
However it was noted that this deal was only likely to progress if the Aon and WTW ‘mega-merger’ went ahead. Yesterday it was confirmed that this deal had terminated as a result of objections from the US Department of Justice and the prospect of a lengthy legal action before any merger could go ahead.
Share prices in both WTW and Gallagher fell on the news that this subsidiary deal had collapsed.
Gallagher says that in conjunction with the termination, it plans to exercise the special optional redemption feature of its $650 million tranche of 10-year senior notes issued on May 20th, 2021.
The brokerage is also exploring opportunities to deploy its excess cash position through its merger program as well as a possible share repurchase.