Aon to purchase Hewitt for $4.9b in cash, stock
Tuesday, 13 July 2010
LONDON, July 12 (Bloomberg): Aon Corp, the world's largest insurance broker, agreed to buy Hewitt Associates Inc for $4.9 billion in cash and stock to expand its division advising companies on employee pay and benefits.
Hewitt shareholders will receive $25.61 in cash and 0.6362 of an Aon share, valuing the offer at $50 a share, Chicago-based Aon said in a statement. That's 41 per cent more than Hewitt's closing price on July 9.
The purchase is Aon's biggest, surpassing its $1.4 billion acquisition of reinsurance broker Benfield Group Ltd in 2008, according to data. The company, which earns commissions by matching buyers and sellers of insurance, is seeking to boost revenue with the purchase of Hewitt, which provides payroll and consulting services to 3,000 clients.
"This merger will give us a broader portfolio of innovative products and services focused on what we believe are two of the most important topics in the global economy today: risk and people," Aon Chief Executive Officer Greg Case said in the statement.
Aon will merge Hewitt with its Aon Consulting unit and rename the division Aon Hewitt. The company said it expects to reap $355 million in annual cost saving by cutting back-office costs and overlapping managers. Russ Fradin, chairman and CEO of Hewitt, will head the combined division and report to case.
Aon said it is paying about 7.5 times Hewitt's forecast earnings before interest, taxes, depreciation and amortisation for the 2010 fiscal year. Credit Suisse Group AG and Morgan Stanley will arrange a $1 billion three-year term loan and a $1.5 billion bridge loan facility to help fund the cash element of the deal.
Credit Suisse acted as a financial adviser to Aon and Citigroup Inc. advised Hewitt on the deal. The purchase is expected to complete by mid-November, Aon said.
Hewitt shareholders will receive $25.61 in cash and 0.6362 of an Aon share, valuing the offer at $50 a share, Chicago-based Aon said in a statement. That's 41 per cent more than Hewitt's closing price on July 9.
The purchase is Aon's biggest, surpassing its $1.4 billion acquisition of reinsurance broker Benfield Group Ltd in 2008, according to data. The company, which earns commissions by matching buyers and sellers of insurance, is seeking to boost revenue with the purchase of Hewitt, which provides payroll and consulting services to 3,000 clients.
"This merger will give us a broader portfolio of innovative products and services focused on what we believe are two of the most important topics in the global economy today: risk and people," Aon Chief Executive Officer Greg Case said in the statement.
Aon will merge Hewitt with its Aon Consulting unit and rename the division Aon Hewitt. The company said it expects to reap $355 million in annual cost saving by cutting back-office costs and overlapping managers. Russ Fradin, chairman and CEO of Hewitt, will head the combined division and report to case.
Aon said it is paying about 7.5 times Hewitt's forecast earnings before interest, taxes, depreciation and amortisation for the 2010 fiscal year. Credit Suisse Group AG and Morgan Stanley will arrange a $1 billion three-year term loan and a $1.5 billion bridge loan facility to help fund the cash element of the deal.
Credit Suisse acted as a financial adviser to Aon and Citigroup Inc. advised Hewitt on the deal. The purchase is expected to complete by mid-November, Aon said.