Insurance giant Aon and Willis Towers Watson have agreed to terminate their $30bn (£22.9bn) merger agreement in what would have created the world’s largest insurance broker, and have blamed U.S. regulators’ objections for unacceptable delays and uncertainty.
Aon cited an “impasse” with the U.S. Department of Justice (DOJ) as the reason behind the decision to scrap the business combination agreement and end litigation with the DOJ, 16 months after the deal was first announced on 9 March 2020.
U.S. Attorney General Merrick Garland called the termination “a victory for competition and for American businesses” because employers “rely on insurance brokers like Aon and Willis Towers Watson for managing the complexities of these health and retirement benefits,” he said.
It marks a first bold move by the Biden administration to block corporate consolidation, after the US government sued to block the deal last month.
In its complaint, the DOJ said the merger would “remake the Big Three into a Big Two” in the insurance world, and “eliminate substantial head-to-head competition and likely lead to higher prices and less innovation, harming American businesses and their customers, employees and retirees”.
If the merger had gone ahead, London-headquartered Aon would have overtaken the third of the big three, Marsh & McLennan, as the world’s biggest insurance broker.
Aon CEO Greg Case said the two insurers had “reached an impasse” with the DOJ, whose stance “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,” Case added.
The insurance mega-deal had recently been approved by the competition watchdog in the EU, what would have been the merged insurance giant’s other main market.
Aon will pay a $1 billion termination fee to Willis Towers Watson, the statement said, and the two firms will “move forward independently.”
Aon is expected to report its quarterly results on Friday.