Insurance broker Aon to acquire Hewitt for $4.9 billion

Aon Corp., a US-based risk management services, insurance and reinsurance brokerage, human capital and management consulting firm, plans to pay out $4.9 billion to buy-out the human resources consulting and outsourcing firm Hewitt Associates based in Lincolnshire, Illinois. Aon’s move to acquire Hewitt Associates is said to be the largest-ever transaction of the insurance broker, which plans to issue 64 million shares as well as pay a 41 per cent dividend for the HR consultancy and outsourcing firm.

A website reports that Aon Corp., the largest insurance brokerage firm worldwide, has announced that it was willing to pay $50 for each share of Hewitt Associates. The payment is scheduled to be made in two manners that will comprise cash payment of $25.61 for each Hewitt share and 0.6362 in Aon stock. Aon has said that it intends to incorporate Hewitt Associates into the firm’s current consulting and outsourcing venture and launch a new unit called Anon Hewitt following the acquisition of the HR consulting and outsourcing firm. The present chairman and CEO of Hewitt, Russ Fradin will be the chairman and CEO of the new unit – Aon Hewitt.

Executives of Aon Corp. are of the view that acquiring Hewitt would enable the Chicago-based insurance broker to make an annual saving of around $355 million from the 2013 fiscal. The savings are expected basically by lessening back-office districts, public company expenses, overlapping of management and obtaining more from the existing technology platforms. In addition, the insurance brokerage firm is also optimist that the deal would help the company to earn additional revenues during the 2011 and 2012 fiscals.

While it is expected that the deal will close by the middle of November 2010, the acquisition of Hewitt would enhance Aon’s revenues to $4.3 billion. During the 2009 fiscal, Aon earned revenues worth $1.2 billion from its consulting business alone.

Meanwhile, Hewitt executives in India have expressed hope that the proposed acquisition of the company by Aon Corp. will prove to be beneficial for the HR consultancy firm’s operations in India, as they have a highly effective existence in the outsourcing services field. Substantiating his view, a Hewitt India spokesperson, who spoke on the condition of anonymity, told another news website that they not only have approximately 8,000 associates in India, most of whom are in the outsourcing services sector, but they also offer outsourcing services to several firms in North America.