Aon (AON) - Get Report shares declined after the world’s second biggest insurance brokerage agreed to acquire Willis Towers Watson (WLTW) - Get Report, the world's No. 3, for almost $30 billion in stock.
The deal would put the enlarged Aon ahead of Marsh & McLennan (MMC) - Get Report as the world’s biggest brokerage. The combination is the biggest of the year in any industry and was announced on a day when the stock market is plunging.
Insurance brokers are consolidating. Marsh bought the U.K.’s Jardine Lloyd Thompson Group for 4.3 billion pounds ($5.63 billion) in 2019.
The big companies hope to broaden their geographical reach and offer more products. Aon and Willis began talks last year.
Under the terms of the new deal, Willis Towers Watson holders will receive 1.08 Aon shares for each of their shares. Aon shareholders will own about 63% of the combined company.
Greg Case, Aon’s chief executive, will be CEO of the combined company. John Haley, Willis Towers’ CEO, becomes executive chairman of the new company.
“When you think about what’s going on with clients, volatility in the world is increasing,” Case told Bloomberg News. “All the traditional risks, just the traditional basket, is actually bigger than ever before, and then now you’ve got all the non-traditional stuff kicking in.”
The coronavirus would presumably represent one of the non-traditional risks.
At last check Aon shares traded at $180.15, down 16%. Willis Towers stock traded at $183.50, down 8.1%. Both stocks’ losses exceeded the S&P 500 index, which dropped 6.1%.
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