Insurance broker Aon Corp. announced its acquisition of human-resources consulting and outsourcing company Hewitt Associates Inc. for $4.9 billion in cash and stock to expand its consulting business.
Aon will pay $50 per Hewitt share, representing a 41 percent premium to Hewitt’s closing stock price of $35.40 on Friday.
Aon plans to integrate Hewitt with its existing consulting and outsourcing operations and operate the segment under the newly created Aon Hewitt brand, the company said.
“This merger will give us a broader portfolio of innovative products and services focused on what we believe are two of the most important topics in the global economy today – risk and people,” Aon chief executive Greg Case said on Monday.
Hewitt stockholders will receive $25.61 in cash and about 0.6362 percent of a share in Aon stock for each Hewitt share. The total payment will be $2.45 billion in cash and issue of 64 million shares.
The companies expect the deal to save about $355 million annually by 2013 through reduction in back-office areas and other impacts. The transaction is expected to close by mid-November.
49 percent of Aon Hewitt’s operation by revenue would be consulting, 40 percent would be benefits outsourcing and 11 percent would be from HR business process outsourcing, Aon said in a statement.
Aon expects the transaction to add to its earnings on a GAAP basis in 2012 and on an adjusted basis in 2011. Aon expects the deal to be significantly help cash earnings in 2011. Aon bought reinsurance broker Benfield Group Ltd. for $1.4 billion, or 350 pence a share, in 2008.
Credit Suisse Group AG acted as a financial adviser to Aon and Citigroup Inc. advised Hewitt on the transaction.
Hewitt helps more than 3,000 clients and serves nearly two-thirds of the FORTUNE 500. The company handles more than 117 million human resources-related customer interactions a year for nearly 16 million employees, retirees, and their families.
Shares of Aon closed at $38.34 on Friday on the NYSE.
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