Aon PLC will pay $ 350 million to $ 400 million in costs related to the scrapped plan to buy rival Willis Towers' Watson PLC, in addition to the $ 1 billion departure fee it has already paid, its chief financial officer said on Friday.
Additional costs refer to transaction costs, replacement costs and further development of Aon's business model, said Christa Davies, brokers' CFO, at a conference call with analysts to discuss Aon's second quarter results.
“These fees are related to costs to close and terminate the combination including related divestments. They will all emerge during the third quarter as part of a clean break with Willis Towers Watson, she says.
Aon has significant amounts of cash to invest, Davies said. "We invest organically, inorganically with M&A and in (share) repurchases on return on capital," she said.
The decision to scrap the deal after 1
its right, DOJ highlighted the size of the combined brokers' large account brokerage business, among other things, which raised competition problems. Aon had already agreed to sell significant parts of Willi's business to Arthur J. Gallagher & Co. and others to address the competition issues raised by European regulators.
Additional divestments "would have damaged our customer service opportunities" and stifled innovation, Mr. In Case. And long-running disputes through a trial scheduled to begin in November were also "unacceptable," he said.
"We just will not wait for a holding pattern well into 2022 to resolve this," Case said. sade.
Most of the related divestments to Gallagher and others depended on the completion of the Aon-Willis deal and have also been terminated. Aon's agreement to sell its pensioner health exchange to the former Aon unit Alight Solutions was amended and terminated, however, after the end of the second quarter, according to Aon's income statement.
Aon reported $ 2.89 billion in revenue in the second quarter, a 15.6% increase over the same period last year. Organic revenue growth for the quarter, which excludes the effect of exchange rates — including a weaker U.S. dollar — and various other factors, increased by 11%, compared with a 1% decrease in the previous year, which was affected by the coronavirus pandemic.
Aon's core business for commercial real estate / accident insurance reported revenue of $ 1.35 billion for the quarter, an increase of 14% on an organic basis, and its reinsurance brokers reported $ 500 million in revenue, an increase of 9% on an organic basis.  Mr. Case said Aon's organic growth rate is expected to be in the middle of a single-digit range or better for the rest of 2021 and beyond.
Aon reported $ 393 million in net income for the second quarter, a decrease of 4.4% from the same period last year, as it incurred higher costs and taxes.