Aon Corp. has agreed to buy human resources company Hewitt Associates for US$4.9 billion in a cash and stock deal.
Aon said it will pay $50 per share for Hewitt, a 41% premium over Hewitt’s closing price Friday of $35.40.
The insurance broker plans to create a new consulting and outsourcing operations unit, Aon Hewitt, once the deal closes. According to reports, Russ Fradin, chairman and chief executive officer of Hewitt, will become chairman and CEO of Aon Hewitt.
“This agreement reflects our ongoing efforts to ensure that Aon’s associates, capabilities and technology remain at the forefront of our industry, providing distinctive client value,” said Greg Case, CEO of Aon Corporation, in a statement. “As we continue to grow our business, 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 said it will create an “integration team” lead by Greg Besio, chief administrative officer of Aon. The team will include Kristi Savacool, senior vice-president of Hewitt Large Markets Benefits Outsourcing; Jim Konieczny, president of Hewitt HR Business Process Outsourcing; Yvan Legris, president of Hewitt Consulting; and Kathryn Hayley, co-chief executive officer of Aon Consulting.
Aon believes the deal will save $355 million annually beginning in 2013 by reducing back-office areas, management overlap and public company costs and getting more from technology platforms. It also said the deal will help earnings in 2011 and 2012.
Hewitt stockholders will receive $25.61 in cash and about 0.64 per cent of a share in Aon stock per Hewitt share. The total payment will be $2.45-billion in cash and 64 million shares.
The deal is expected to close by mid-November.
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