Deals and People July 26, 2021

Aon-Willis Towers Watson Merger Proposal Called Off

In a statement, the firms say they have agreed to terminate their business combination agreement and end antitrust litigation filed by the Department of Justice.

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News broke Monday morning that the proposed merger of Aon plc and Willis Towers Watson (WTW) has been terminated, drawing one of the most closely watched merger and acquisition (M&A) transactions in the global financial services industry to a sudden and unsuccessful close.

In a statement published to their respective websites, the firms say they have agreed to terminate their business combination agreement and end litigation with the U.S. Department of Justice (DOJ). The proposed combination was first announced on March 9, 2020.

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“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,” says Aon CEO Greg Case. “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.”

For context, it has been about six weeks since the DOJ filed a civil antitrust lawsuit to block Aon’s proposed $30 billion acquisition of WTW, a transaction that would have brought together two of the “Big Three” global insurance brokers. The largest broker currently is Marsh McLennan, which owns Mercer, followed by Aon and WTW.

At the time, the WTW and Aon leadership said the DOJ’s action “reflects a lack of understanding of our business, the clients we serve and the marketplaces in which we operate.” The firms argued—and continue to argue—that the combination would accelerate innovation on behalf of clients, “creating more choice in an already dynamic and competitive marketplace.”

WTW and Aon have also argued that the pandemic’s impact has underscored “the need to address similar systemic risks, including cyber threats, climate change and the growing health and wealth gap which our combined firm will more capably address.”

Case’s Monday statement continues: “Over the last 16 months, our colleagues have turned potential challenges into opportunities to advance our Aon United strategy. … Our respect for Willis Towers Watson and the team members we’ve come to know through this process has only grown.”

Willis Towers Watson CEO John Haley says the firm remains well-positioned to vigorously compete across its businesses around the world.

In connection with the termination of the business combination agreement, Aon will pay a $1 billion termination fee to Willis Towers Watson. In the United Kingdom, Willis Towers Watson’s proposed plan of arrangement has now lapsed.

Both firms say they will provide further financial updates and outlooks on their respective Q2 2021 earnings calls, which are set to take place on July 30 for Aon and August 3 for Willis Towers Watson.

The preliminary statement about the merger termination didn’t directly address the status of Aon’s definitive agreement, made public in June, to sell its U.S. retirement business to Aquiline Capital Partners and its Aon Retiree Health Exchange business to Alight.

According to a statement shared at the time by Aon, the total gross monetary value of that deal is approximately $1.4 billion, and the agreements were specifically intended to “address certain questions raised by the U.S. Department of Justice in relation to the combination with respect to the markets in which these businesses are active.”

As Aon clearly spelled out, the move was intended to resolve potential future antitrust issues for Aon while it worked on its proposal to merge with WTW. Asked for a comment on this matter, the firm shared a previously published press release confirming the signing of the definitive agreements.

The U.S. retirement business Aquiline is acquiring includes approximately 1,000 employees and the business segments covered include U.S. core retirement consulting, U.S. pension administration and the U.S.-based portion of Aon’s international retirement consulting business, along with many solutions and tools.

While the merger deal with Aon and WTW has been halted, broader financial services M&A activity continues at record pace. Over the past decade, the universe of retirement plan recordkeepers has contracted from about 400 to approximately 150, with no signs of slowing. The adviser/consultant space is now starting to experience commensurate consolidation, and the same can be said of asset managers. 

Reader Responses July 26, 2021

SURVEY SAYS: Has Your Company Experienced ‘The Great Resignation?’

NewsDash readers share whether their companies have experienced a greater number of employee resignations than usual and reasons employees left.

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After seeing several news reports about what is being called “The Great Resignation,” brought on in part by the pandemic, I asked NewsDash readers, “Has your company experienced a greater resignation of employees than usual in the past six months to a year?” and “What were some of the reasons employees left?”

Eighty-three percent of respondents work in a plan sponsor role, 9% work for recordkeepers/TPAs/investment consultants and 9% are advisers/consultants.

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More than half (52%) said their companies have not experienced a greater resignation of employees than usual in the past six months to a year, while 48% reported that they have.

More than one-third (34.8%) of responding readers said non-pandemic-related dissatisfaction with the job/found a new job was a reason employees left. A desire for a more flexible work arrangement as the company goes back to the office, a desire for a new career and “don’t know” were each reasons cited by 17.4% of respondents. Thirteen percent said some employees realized they were able to retire early, and 4.3% reported that a need to stay home and care for children or other loved ones was a reason some employees left.

More than one-third also selected “other” reasons, which included force outs, early retirement incentives offered to reduce staff, compensation, didn’t feel appreciated and had a baby. One reader reported that they have actually increased staff in the last six months to one year.

Readers who left comments offered their views of reasons employees are leaving their jobs, including a re-think of priorities and being “fed up with seeing amazing profits and surging stock prices, but not seeing it in their paychecks.” Others noted how their companies have taken care of employees and how they are handling the return to work. “Employees know when a company cares about them!” one reader said. And there was even a “sort of” job offer. No Editor’s Choice this week. A big thank you to everyone who participated in the survey!

Verbatim

No change…yet.

The pandemic has definitely made people re-look at their priorities and what is important in life. As far as those who resigned are concerned it is hard to tell if their reasons were 100% truthful as they may not want to burn a bridge, as they say.

My employer reacted quickly to the pandemic to get people working from home and was accommodative to those with challenges and family issues. The current future vision allows many/most employees to continue working from home, which seems to be a very popular arraignment.

I think most people will find different work if they so choose due to the current open hiring market. However, those companies trying to get workers back or hire new are not only in competition with each other, but with the federal government as well. People are incentivized to stay home.

We have seen a small increase in the number of early retirees. We have not seen an increase in regular turnover. My company went the extra mile to protect employees during COVID. Employees know when a company cares about them!

I think the pandemic has caused many people to re-evaluate what life experience they want to have. For some, staying with the job they have always had doesn’t feel like enough of a change to them. They want to completely re-imagine what their work and life will look like going forward and a job change feels like the place to start.

Although we are transitioning back to the office via a hybrid schedule, there are some parameters in place – such as mandatory Mondays/Fridays 2x per month, that employees are not appreciating. We had one employee calculate the cost of her 1.5-hour one way commute and decide it wasn’t economically feasible for her to continue to come into work, even 2 days a week! It’s a new world…

Since the company I work for has shifted to a permanent work-from-home model (for those that want that), it seems if anything it’s gotten people to want to stick around since it gives them the freedom to move around the country without risking a job change.

Unrelated to the pandemic except in timing, many have grown tired of the imposition of political ideology being forced on employees and their opinions. Rather than focusing on doing good work, the focus has changed to be on extreme sociopolitical “values” and has caused great divisiveness and dissatisfaction.

It’s accelerated the overly analyzed flexible work schedule. The company kept talking about it but never made a decision. Now they realize it’s crucial at a base level to keep all employees, not just those just entering the work world that were initially driving the conversation.

People are leaving for better jobs, better pay and more appreciation for their hard work. Employees are fed up with seeing amazing profits and surging stock prices, but not seeing it in their paychecks.

I’ve loved working from home (I’m an introvert). Fortunately, my employer realized we remained very productive while working remote and has decided to allow more flexible schedules when the time comes for us to return to the office. I’m expecting to work at least two days a week from home.

We’ve only had one employee resign!!! The only problem is that her position is extremely hard to fill. Anyone want a Physical Therapist job?

 

NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Institutional Shareholder Services (ISS) or its affiliates.

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