📄 "Will" The Aon Soap Opera Have A Happy Ending?

Carnival stock falls on data breach, BMS to develop cancer drug 💊

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Thursday’s Close) 4,221.86 -1.84 (0.04%)

NASDAQ (Thursday’s Close) 14,161.35 +121.67 (0.87%)

FTSE 100 (4:30 PM IST) 7,089.99 -63.44 (0.89%)

NIFTY 50 (Today’s Close) 15,683.35 -8.05 (0.05%)

USDINR (Today’s Close) 73.92 (1 Year -2.01%)

🔥 Top Movers

KNBE +24.69%
ATEX +17.35%
ACMR +13.36%

CVAC -38.99%
PRTA -15.49%
WDH -11.35%

📄 Aon: No Insurance Against Antitrust?

It would have been the largest insurance broker in the world if the deal didn’t attract antitrust review. AON’s (AON) $30B acquisition of Willis Towers Watson (WLTW) is in limbo after the US Department of Justice filed a lawsuit to stop the deal from going forward. It’s now up to the courts to decide. (Tweet This)

Act I: Plans For The Mega Union

When Willis Group Holdings and Towers Watson merged in 2016 it created a behemoth. Willis Towers Watson, the third largest insurance broker in the world has covered everything under the sun – from airlines to large sporting events.

Aon, the second largest insurance broker, made a $30B all-stock bid to acquire Willis Towers back in March 2020. The new company would continue to be called Aon with a combined market value of $80B and would have surpassed Marsh & McClennan as the largest insurance broker. The deal would have delivered $800M in savings off the bat and improved profitability of the combined entity.

There was a glitch however. The pandemic was just taking hold and investors questioned the timing of the announcement, especially when no one had any idea of what the following few months would bring. The day the deal was announced, Willis Towers’ market cap fell by $5B. Aon’s stock fell 16%.

Given the fact that it was the #2 and #3 coming together to dethrone the #1 player in the market, regulators were sure to take an exception and they did. In order to placate them, Aon and Willis were ready to sell assets worth $3.57B to the #4 player, Arthur Gallagher.

As a further preemptive measure, Aon, just this month, announced the sale of some of its assets to Aquiline Capital Partners, a PE fund, and tech firm Alight for $1.4B.


Act II: The Mega Regulatory Block

Back in December, the European Commission had expressed concerns that this merger will narrow customer choices while giving the combined entity too much leverage and pricing power. Reducing competition in a market economy would only impact the customers negatively.

This week, the DoJ jumped in with its own lawsuit in the District Court, Washington D.C. voicing similar reservations, saying the deal will turn the “big three” insurance brokers into the “big two.” The DoJ also took the stance that the divestments made so far by the two companies are wholly inadequate to satisfy its requirements and protect the US consumers.

Aon and Willis, on their part, have highlighted the DoJ’s lawsuit as lacking understanding of their business, their clients, and the marketplaces in which they operate.

And so, the plot in the insurance industry soap opera continues to evolve. Two parties who wish to unite; hurdles – anticipated and otherwise – thwart their plans for a union; and, no signs of a happily-ever-after on the horizon yet. As of now, the suitors are relegated to singing songs of despair.

Market Reaction
AON ended the day at $232.84, down 4.61% while WLTW ended at $232.19, down 2.09%.

Company Snapshot 📈

AON $232.84 -11.26 (4.61%)

Analyst Ratings (17 Analysts) BUY 41%  HOLD 41%  SELL 18%

Newsworthy 📰

Work In Progress: Bristol-Myers, Eisai in up to $3.1B deal to develop cancer drug candidate (BMY -0.22%)

Hack: Cruise operator carnival discloses personal data breach, shares down (CCL -2.94%)

Digital Art: Mattel announces Hot Wheels digital collectibles, joining NFT art boom (MAT -2.86%)

Later Today 🕒

  • Fortinet Inc. Annual General Meeting (FTNT)
  • BioLife Solutions Inc. Annual General Meeting (BLFS)

Fun Fact of The Day 🌞

Each week, nearly one-third of the US population visits a Walmart

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