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Aon/Willis to divest parts of finpro, cyber and aerospace

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Aon and Willis Towers Watson have proposed the sale of elements of the Willis finpro, cyber and aerospace units as they seek to secure approval from the European Union for their $30bn mega-merger, according to a European Commission (EC) document obtained by this publication.

The EC said that its initial investigation provided indications that the transaction “could potentially lead to the reduction of choice and price increases” in the areas lined up for divestment.

The document, sent out by the EC as part of market testing, shows potential remedies in addition to the previously reported and confirmed disposal of Willis Re and the French, German, Dutch and Spanish broking businesses (excluding affinity), representing approximately 1,943 employees.

In it, the parties outline that alongside the sale of the Corporate Risk and Broking (CRB) businesses in the four European countries – which will include P&C, finpro and cyber – Willis will also sell the entire CRB EEA finpro and P&C business with large multinational customers headquartered in those four countries.

It also said that a portion of the CRB finpro UK business with large multinational customers would be sold, including "UK-based finpro brokers and additional finpro customer contracts in the UK which are served by these brokers".

It further stated that "a number of brokers" in each of Italy, Poland and Portugal could also move at the option of the purchaser.

In addition, the document said that Willis' CRB cyber specialty business in the UK would be disposed of, as well as its global CRB business for aerospace manufacturing and space.

The document also revealed that the parties are proposing to sell Aon's retirement benefits consulting and pension administration business in Germany.

It further confirmed Willis' reinsurance broking business across treaty and fac would be sold, representing 2,230 staff.

The Willis reinsurance sale would include all Willis Re legal entities, the transfer of renewal rights, all relevant tangible and intangible assets, and offices leased exclusively or primarily for Willis’ reinsurance business. Offices in China and Hong Kong are excluded from the scope of the remedy package.

Earlier today, the European Commission published a notice on its website indicating that Aon and Willis had proposed remedies to secure approval for the deal in the face of antitrust concerns.

The EC's notice confirms the restarting of the clock which was stopped on 9 February to allow the parties time to work on remedies and gather information.

Based on the standard timelines which provide a fixed number of days for a Phase II review, the process must now conclude by 12 July at the latest – although it could be brought to a close sooner.

With the formal process restarted following the submission of proposed remedies, the EC has now followed established procedure and sent out a document to market test the disposals.

The EC document did not identify potential purchasers for the commercial risk brokerage assets but set out some of the grounds for deals.

It said all the proposed remedies needed “to be viewed together with the capabilities of a suitable purchaser”.

The aim of any transfer would be “bolstering an existing commercial risk broker to increase its capabilities to compete effectively in the markets for large multinational customers, primarily by transferring broker expertise, large and complex customers and offices in four strategic jurisdictions to enhance the owned network for the purchaser”, according to the document.

The document has gone to both clients and competitors, and responses will be considered ahead of the EC's final decision on whether to approve the transaction.

The EC said it would collect views on the “scope, design and viability” of the proposed commitments.

It is requested that parties submit their responses by close of business on 16 April 2021.

This publication revealed last month that Willis Towers Watson has contacted potential acquirers for its ~EUR750mn-revenue French, German, Spanish and Dutch businesses as it explores possible sales.

And earlier this month, this publication broke the news that Willis Towers Watson is looking to sell Willis Re, including both its $700mn treaty business and $300mn facultative unit, to secure regulatory approval for its takeover by Aon.

Aon declined to comment. Willis did not immediately respond to a request for comment.

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