S&P Downgrades AON (AON) TO Hold From Buy

S&P downgraded AON AON To Hold from Buy today based on the announced merger with Hewitt Associates HEW They see execution risk and margin declines. “ AON AON announced plans to merge with Hewitt Associates (HEW 47, Hold) with the deal expected to close in November 2010. We think the proposed $4.9B transaction presents AON with execution risk and expect margins to decline to 20% from 25% for the standalone company. We see the merger giving AON more leverage to a global economic recovery, but anticipate few near-term catalysts due to our expectations for slow global economic growth. Given the addition risks we foresee, we apply a lower P/E multiple of 11.6X to our '10 EPS estimate, and a cut our target price by $9 to $39./B. Howlett”