Aon To give $4.9 Billion for Hewitt Associates
Insurance broker Aon Corp. made an agreemetn of it’s planning to buy human-resource consulting and outsourcing company Hewitt Associates Inc. with a worth of $4.9 billion.
The deal will nearly triple the size of the Aon’s consulting operations, making it a $4.3 billion business by revenue. Aon Hewitt, as the consulting and outsourcing operations will be known, will be run by Hewitt Chairman and Chief Executive Russ Fradin.
The transaction values Hewitt at $50 a share, a 41% premium over Friday’s closing price. Holders will be able to vote all cash or stock, but $2.45 billion of cash will be paid for Hewitt, with stock making up the rest. Except otherwise requested, holders would get $25.61 and 0.6362 share of Aon stock for each share of Hewitt.
The arrangement is expected to close by mid-November, would slash into Aon’s profit next year, but increase it slightly absent restructuring-related charges. Earnings on both basis are expected to raise at Aon starting in 2012 as a result of the acquisition.
The companies will be expecting the deal will save about $355 million annually by 2013, majority from decrease in back-office areas and other impacts.
Hewitt has 3,000 clients, and 49% of Aon Hewitt’s operation by revenue would be consulting. Another 40% would be benefits outsourcing.
In April, according to Aon, its first-quarter earnings dropped 36% after $126 million in year-earlier tax gains, though its adjusted earnings rose and topped analysts’ forecasts. Hewitt in May said its fiscal second-quarter earnings fell 15% on charges and a year-earlier gains as revenue increased and adjusted results rose.
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