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Willis pursuing sale of French, German, Spanish and Dutch units

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Willis Towers Watson has started to reach out to potential acquirers of its combined French, German, Spanish and Dutch businesses, as the firm and its acquirer Aon take the steps needed to secure approval from the European Commission for their deal, this publication can reveal.

Sources said that Willis, with the support of would-be acquirer Aon, is in the early stages of soliciting interest in a deal to buy its operations across the four European countries.

Gras Savoye, the French arm, is the largest of the four and considered by many to be one of the jewels in the Willis crown. Last week L’Argus de l’assurance, a French paper, reported that Willis/Aon may move to dispose of Gras Savoye, which had EUR517mn of revenues in 2019.

Sources suggested that across the four countries, Willis could have insurance broking revenues of roughly EUR750mn. According to its financial disclosure, Willis employs 7,700 people in Western Europe excluding the UK.

Willis is believed to have been the number two broker in Spain, but it recently lost a slew of senior staff, including Alberto Gallego and Jaime Castellanos, who are forming a joint venture with Marsh, pointing to the likelihood its position will come under pressure there.

In its annual report, Willis said that 4% of group revenues came from French clients and 3% from German clients.

Aon and Willis are in the latter stages of trying to close the most ambitious piece of M&A in the history of the P&C sector to create an advisory business across broking and human capital benefits with ~$20bn of revenues.

Sources have suggested that the combination is coming under pressure from the European competition authorities to offer remedies to satisfy antitrust concerns, with Aon and Willis proactively seeking to make moves to address issues across a number of different fronts.

Pursuing a sale of these geographical assets would represent a major concession to the European Commission and could smooth the path to closing.

Sources continue to stress that there is a high likelihood that Willis Re would have to be divested to satisfy the same regulator, and potentially others as well. It is believed that any divestiture would include the ~$700mn treaty business and the ~$300mn fac business, currently housed within insurance.

Questions around whether the large account space should be treated as a separate market are outstanding and would pose the biggest impediment to the deal if the European Commission or the Department of Justice chose to ask for a remedy here. Willis is organized along product lines and geographies, not by client size – making it difficult to execute a divestiture to satisfy such concerns.

In the merger agreement, a base-case disposals cap was set at $1.8bn (19% of Willis revenues), pointing to Aon's long-held determination to see a deal through even if it is obliged to offer substantial remedies.

Sources have suggested that Aon remains determined to close the transaction even if this involves the sale of assets with meaningful revenues. It has continued to publicly stress throughout that it believes the deal – signed in March last year – can be closed by the end of H1, and it is yet to signal any give on that point to the market.

Willis' European businesses are most likely to be pitched to strategic acquirers, pointing to the likes of AJ Gallagher, Lockton and Howden as the most plausible names, although at times the EC has been willing to contemplate private equity owners of businesses that have sufficient scale to compete on a standalone basis.

Aon and Willis declined to comment.

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