July 26 (Reuters) – Insurance brokers Aon Plc (AON.N) and Willis Towers Watson Plc said on Monday that they had agreed to terminate their $30 billion acquisition agreement and end their litigation with the U.S. Department of Justice. The deal would have put London-headquartered Aon before the world’s largest insurance agent Marsh & McLennan Cos Inc (MMC.N).
“Despite regulatory momentum around the world, including the recent approval of our combination by the ECU Commission, we reached an impasse with the U.S. Department of Justice,” Aon Chief military officer Greg Case said during a statement. Aon can pay $1 billion as a termination fee to Willis, it said. In June, the Department of Justice (DOJ) had sued to dam the deal, saying it might reduce competition and will cause higher prices. The DOJ had alleged that combining the 2 large insurance brokers would harm competition in reinsurance broking, retirement and pension planning, and personal retiree multicarrier healthcare exchanges.
A federal judge had narrowed the scope of the lawsuit last week, which came after Aon and Willis agreed to divestitures to win approval within us and Europe after discussions with regulators. The divestitures included Aon’s U.S. retirement unit, U.S. retiree healthcare exchange, and retirement business in Germany. Also included was Willis Towers Watson’s global reinsurance business. EU antitrust regulators approved the merger earlier this month conditioned on a number of sales. Aon ranks second and Willis fifth among U.S. commercial insurance brokers within the U.S. market, consistent with a survey by Business Insurance magazine.
The other largest brokers within us are Marsh & McLennan, Arthur J Gallagher & Co (AJG.N), and Alliant Insurance Services Inc. In April, insurance firm Chubb Ltd (CB.BN) said it had been not watching buying smaller rival, the Hartford Financial Services Group Inc (HIG.N) after the latter rebuffed Chubb’s takeover bids post declining to interact in talks on the $23.24 billion buyout proposal. Aon’s shares were up 4% at $242, while Willis Tower’s stock was down 3.5% at $218 in pre-market trading.
