Broking giants Aon and Willis Towers Watson have called off their $US30 billion merger, blaming US regulators for blocking the mega-deal.
The two international broking and advisory groups scrapped plans to combine after running into opposition from US President Joe Biden’s Department of Justice, which had sued to block the transaction.
U.S. Attorney General Merrick Garland described the deal’s termination as a “victory”. The DOJ had argued the M&A deal would reduce competition and lead to higher prices.
Regulators had looked at whether the merger would have impacted large US companies buying property, casualty, or financial risk coverage.
The DOJ said the combination would reduce competition in reinsurance broking, retirement and pension planning and private retiree multi-carrier healthcare exchanges.
European regulators had approved the deal on the condition the two companies sold assets to smaller rivals. Those sales, to Arthur J Gallagher, have been halted.
The decision to call off the deal will impact the New Zealand market, with Aon and WTW set to continue as independent businesses.
It halts a trend of mega-mergers in the broking sector. Marsh acquired JLT for US$5.6 billion last year, while NZ broker Crombie Lockwood was acquired by New York-listed Gallagher in 2014, bringing a well-known Kiwi name under the umbrella of a US giant.
Following the collapse of the deal, Aon will pay Willis a $1 billion termination fee.
At the time of the announcement, Aon shares rose by 9.6% in US trading, while Willis Towers’ stock fell by 9%. Aon's shares were up 9.6% at $254.72, while Willis Towers' stock fell 9% to $205.93 in New York trading.
