Faced with opposition from antitrust regulators, business insurers Aon and Willis Towers Watson scrapped their plans Monday to combine in a $30 billion deal.
The Justice Department sued to block the deal in June, charging that Aon’s acquisition of Willis would raise prices for businesses and reduce competition. In addition to brokerage services for insurance, the companies are global leaders in benefits consulting and risk management.
The antitrust suit said the two companies operate “in an oligopoly” and would have more market power if brought together. Aon CEO Greg Case, who would have run the combined businesses, said the suit forced the sale’s cancellation.
“Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the U.S. Department of Justice,” Case said. “The DOJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point.”
Aon is headquartered in Dublin and Willis is based in London but both have substantial operations in Chicago. Each company has attached its name to a Chicago skyscraper, with Willis owning the naming rights to the 110-story Willis Tower. It bought those rights in 2009, when the company was called Willis Group Holdings.
The sale raised questions about a name change for Chicago’s tallest building. Aon had said the Willis business name would be dropped. But with the deal scrapped, that issue is moot.
Aon will pay Willis a $1 billion termination fee. Both companies said they will move forward independently.
“We believe we are well-positioned to compete vigorously across our businesses around the world and will continue to introduce important innovations to the market,” said Willis CEO John Haley.
Aon shares were sharply higher in Monday trading, gaining about 8% to $251.43, while Willis shares were off nearly 9% to $206.07.
Willis said Monday it will add $1 billion to an open-ended share repurchase program, which had about $500 million left from its previous authorization.