Aon is set to buy Willis Towers Watson in an all-stock transaction with an implied combined equity value of approximately $80 billion.
The deal will see the combination of two of the world’s largest insurance brokers.
Willis Towers Watson CEO John Haley, described the combination of the two firms as “a natural step in our journey to better serve our clients in the areas of people, risk and capital”.
Haley said: "This transaction accelerates that journey by providing our combined teams with the opportunity to drive innovation more quickly and deliver more value."
Aon CEO Greg Case added that the merger would create “a more innovative platform” that will create better outcomes for all stakeholders, including clients, colleagues, partners and investors.
Case stated: “Our world-class expertise across risk, retirement and health will accelerate the creation of new solutions that more efficiently match capital with unmet client needs in high-growth areas like cyber, delegated investments, intellectual property, climate risk and health solutions."
The combined company will be named Aon, maintaining its operating headquarters in London.
As part of the deal, Haley will take on the role of executive chairman with a focus on growth and innovation strategy.
The combined firm will be led by Case and Aon chief financial officer Christa Davies, along with a leadership team from both organisations.
The board of directors will comprise proportional members from Aon and Willis Towers Watson's current directors.
Both companies expect the transaction to close in H1 2021.
Upon completion of the combination, existing Aon shareholders will own approximately 63 percent, while Willis Towers Watson shareholders will own approximately 37 percent of the combined company on a fully diluted basis.
Aon anticipates that the transaction will provide annual pre-tax synergies and other cost reductions of $800 million by the third full year of combination, thereby allowing the firm to continue significant investment in innovation and growth.
Willis Towers Watson and Aon anticipate savings of $267 million in the first full year of the combination, reaching $600 million in the second full year, with the full $800 million achieved in the third full year.
Aon considered a bid for Willis Towers Watson last year, but in March released a statement stating that the company would not be pursuing an all-share business combination.
The deal comes a year after Marsh & McLennan Companies (MMC) completed the acquisition of Jardine Lloyd Thompson Group (JLT) for $5.6 billion in fully diluted equity value.
