GLOBAL - Aon has announced a buyout of HR consultancy Hewitt Associates in a $4.9bn (€3.8bn) stock and cash deal. 

The merger, which will see payments in 50% cash and 50% stocks, has Hewitt and Aon Consulting becoming Aon Hewitt.

Russ Fradin, Hewitt's current chief executive and chairman, will take on the same role at the new company. 

The deal values Hewitt shares at $50 (€39.50), more than 40% above last Friday's closing value.

Both companies expect to finalise the deal by mid-November, pending regulatory approval. 

Aon Consulting's chief executive Greg Case said the merger would allow the company to remain at the forefront of the industry. 

"This merger will give us a broader portfolio of innovative products and services focused on what are two of the most important topics in the global economy today - risk and people," he said.

The merger should see the companies make $355m in savings in the next three years, with cuts expected in Aon Hewitt's back office, as well as in management. 

So far, it has been confirmed that Kristi Savacool, Hewitt's senior vice-president for large markets benefits outsourcing; Jim Konieczny, president of Hewitt human resources business process outsourcing; and Yvan Legris, current president of Hewitt Consulting, will be transferred to the new company.

The three will join Fradin, who will report to Greg Case.

The integration of the two HR consultancies will be le by Greg Besio, Aon's chief administrative officer. 

Aon Hewitt is expected to have 29,000 associates worldwide and $4.3bn in annual revenue.

Combined 2009 figures indicate just under half of its revenue will come from consultancy work, with another 40% from benefits outsourcing and the final 11% from HR business process outsourcing. 

Hewitt stockholders will be entitled to $25.61 in cash, as well as 0.64 of an Aon share per holding.