Aon in talks to sell benefits outsourcing unit Aon Hewitt in $4.5B deal
- Insurance broker Aon Plc is close to finalizing the sale of its benefits outsourcing unit to Clayton Dubilier & Rice LLC (CDR), reports Reuters. The divestiture will undo much of Aon’s acquisition of Hewitt Associates, a human resources service provider, for $4.9 billion. Buyout firm CDR beat out private equity firm Blackstone Group LP in an auction to acquire the unit.
- Aon’s sale of its benefits outsourcing unit signals a shift in focus to the insurance and risk management side of the business, says Reuters. The unit processed companies’ claims, including defined contribution, defined benefit and health and welfare administrative services.
- Russell Fradin, an operating partner in CDR, is spearheading the sale. Fradin was Aon’s CEO from 2005 to 2011 and a former chief executive at SunGard Data Systems Inc., says Reuters.
Aon’s divestiture is a move many companies make in order to focus on, and channel more of their revenue toward, their core business. Divestitures, like acquisitions, can generate more opportunities to advance a business.
In May 2016, Aon Hewitt expanded its portfolio, acquiring benefits enrollment and communications firm Univers. At the time, experts said the acquisition signaled the industry's awareness of the growth of voluntary benefits. It will be interesting to see whether Hewitt continues to pursue this strategy under new leadership.
Reuters says Aon plans to complete the sale of its unit by Feb. 10. The company reportedly declined to comment on the sale.