Why Management Consulting Company Aon Shares Are Taking A Hit Today

Global professional services firm Aon plc AON has signed a definitive agreement to acquire NFP, a middle market property and casualty broker, benefits consultant, wealth manager and retirement plan advisor.

Aon will acquire NFP for a total consideration estimated to be $13.4 billion at the time of close. The acquisition will be funded by $7 billion in cash and $6.4 billion in shares.

Aon will acquire NFP from funds affiliated with NFP's main capital sponsor, Madison Dearborn Partners (MDP), and funds affiliated with HPS Investment Partners.

The deal is expected to expand Aon's presence in the large and fast-growing middle-market segment, with capabilities across risk, benefits, wealth and retirement plan advisory.

Doug Hammond, chairman and CEO of NFP, will continue to lead the business as an independent but connected platform within Aon.

The company anticipates the transaction to generate more than $2.8 billion in value creation from the capitalized value of expected pre-tax synergies and capital structure, net of ~$400 million in expected one-time transaction and integration costs.

The deal is expected to be dilutive to adjusted EPS in 2025, breakeven in 2026, and accretive in 2027 and beyond, with positive impacts to free cash flow beginning in 2026. 

Aon held $983 million in cash and equivalents as of September 30, 2023. The company expects the transaction to be completed in mid-2024.

Price Action: AON shares are trading lower by 5.112% at $297 in premarket on the last check Wednesday.