Aon and Willis Towers Watson (WTW) have agreed to terminate their proposed merger and end litigation with the US Department of Justice, the firms announced today.

In connection with the termination, Aon will pay a $1bn (€847m) break fee to WTW.

“Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the US Department of Justice,” said Aon CEO Greg Case.

“The DOJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point.”

The proposed merger was first officially announced in March 2020, a year after media speculation pushed Aon to disclose it had pulled out of discussions.

In June this year the DOJ filed an antitrust lawsuit to block the proposed $30bn deal, saying it “threatens to eliminate competition, raise prices, and reduce innovation for American businesses, employers, and unions that rely on these important services”.

Earlier this month the European Commission approved the acquisition of WTW by Aon, subject to commitments including the divestment of parts of WTW’s business to international brokerage company Arthur J Gallagher.

Commenting today on the decision to scrap the merger, Aon’s Case added: “Over the last 16 months, our colleagues have turned potential challenges into opportunities to advance our Aon United strategy. … Our respect for Willis Towers Watson and the team members we’ve come to know through this process has only grown.”

John Haley, CEO of Willis Towers, said: “We believe we are well-positioned to compete vigorously across our businesses around the world and will continue to introduce important innovations to the market. We appreciate and deeply respect all the Aon colleagues we got to know through this process.”

The combined firm was to have been led by Case and Aon chief financial officer Christa Davies.

Towers Watson, itself the product of a 2010 merger, combined with rival Willis in 2015.

The Aon-Willis Towers Watson merger, which would have created the world’s largest insurance broker, had been planned as an all-stock deal.

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