This M&A news has Aon offering to acquire Willis Tower Watson using its shares. This offer will have shareholders of WLTW stock receiving 1.08 shares of AON stock for each share that they own. That represents a 16.2% premium over the closing price for WLTW stock on March 6, 2020.
The deal will result in AON shareholders owning 63% of the new company. The remaining 37% will belong to shareholders of WLTW stock.
Aon notes that it expects to see several benefits from the M&A news with Willis Tower Watson. Among this is $800 million in pre-tax synergies. The company also expects the deal to be accretive to its adjusted EPS during the first year after closure. It expects this to result in peak adjusted EPS accretion in the high teens.
Based on both companies’ fiscal year 2019 performance, the new entity will have revenue of $20.1 billion. It will also be sporting adjusted operating income of $4.9 billion, adjusted net income of $3.6 billion and free cash flow of $2.4 billion.
Aon CEO Greg Case and Aon CFO Christa Davies will continue to manage the new company once the deal closes. Willis Towers Watson CEO John Haley will take on the Executive Chairman role at the new company.
The M&A news release notes that the deal is set to close during the first half of 2021. This requires completing customary closing conditions, such as obtaining regulatory and shareholder approval.
AON stock was up 2.26% and WLTW stock was up 1.59% as of Tuesday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.