Aon to Sell Assets for $1.4B to Get Willis Towers Merger Deal Going

Aon PLC (AON) is selling more of its assets to clear regulatory hurdles for its merger deal with Willis Towers Watson (WLTW). The insurance broker has agreed to sell its U.S. retirement and retiree health exchange units for $1.4 billion in the latest move.

Aon’s U.S. retirement business includes retirement consulting and pension administration operations. It will sell the unit to private equity firm Aquiline, which has $6.4 billion in assets under management and invests in businesses across financial services, technology, business services, and healthcare.

Aon’s retiree health exchange unit serves employers and their retirees and was the first retiree exchange to meet the National Council on Aging (NCOA) standard. Aon will sell the unit to Alight, a technology firm whose clients include 70% of the Fortune 100 companies.

Aon decided to sell these businesses to address antitrust concerns that U.S. regulators raised over its proposed merger with Willis.

“Aon and Willis Towers Watson continue to work toward obtaining regulatory approval in all relevant jurisdictions,” Aon said in a statement.

Previously, Aon announced the divestiture of its retirement and investment business in Germany, and Willis agreed to sell its Willis Re unit. (See Willis Towers Watson stock analysis on TipRanks)

Aon and Willis are counting on their merger to drive revenue growth and boost profitability. They are expecting $800 million in cost synergies, including the divestiture of earmarked assets. (See AON PLC stock analysis on TipRanks)

Wells Fargo analyst Elyse Greenspan recently reiterated a Buy rating on Aon stock and raised the price target to $287 from $275. The analyst’s new price target suggests 14.11% upside potential.

In reaffirming the bullish rating, Greenspan noted Aon’s strong first-quarter results, optimistic organic outlook, and the confirmation of $800 million in cost savings in the Willis deal.

Consensus among analysts is a Hold based on 2 Buys, 3 Holds, and 1 Sell. The average analyst price target of $261.80 implies 4.09% upside potential to current levels.

AON scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.