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Aon Buys Benfield Group
$1.75 billion deal creates a global reinsurance broker.
August 22, 2008
Aon Corporation will acquire Benfield Group Limited for $6.55 a share, or $1.75 billion overall, representing a 29% premium on Benfield shares for the trading day ended August 21, it was announced Friday.
"Over the past several years, we have made significant progress in strengthening Aon's operational platform and global network, becoming a more client-focused organization with a broader portfolio of innovative products and services,” said Greg Case, president and chief executive officer Aon. “The strong cultural fit between our firms will enable us to quickly realize the benefits of this transaction, and the value added for our clients and shareholders, in a seamless fashion following the close of our transaction.”
A report from Keefe, Bruyette & Woods boosted its 2009 EPS estimate for Aon to $3.45 per share from $3.30; the analysis said the deal should close by year-end.
The deal will afford Aon an advantage in developing markets in Asia, Central and Eastern Europe, Africa and Latin America, the statement said. It also creates immediate synergies between products and a blending of staffs that will realize an anticipated $122 million in cost savings. In its statement, Aon said it would continue its share buy-back initiative.
Grahame Chilton, chief executive of Benfield, will next serve as vice chairman of Aon Group, reporting to Case, who will remain as chief executive officer. Chilton will also join Aon’s executive committee and the Aon Benfield Re executive committee.
The deal was consummated in an all-cash transaction; Credit Suisse was advisor to Aon and its legal counsel was Clifford Chance. Merrill Lynch was Benfield’s advisor and Debevoise & Plimpton served as its legal counsel.
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