Blackstone completes $4.8B buyout of Aon Hewitt's outsourcing unit
- Insurance broker Aon sold its benefits outsourcing business to private equity firm Blackstone Group LP in a $4.8 billion deal, reports Reuters. Blackstone agreed to pay Aon $4.3 billion initially, upping the deal by $500 million based on the business’ future performance.
- Reuters says London-based Aon expects to earn $3 billion in after-tax revenue from the deal, which is subject to financial adjustments. Aon plans to use part of the proceeds to buy back some of its shares and raise its repurchase option to $7.7 million.
- If the agreement falls through, Blackstone will pay Aon a $215 million termination fee, according to Aon’s filings, says Reuters.
For weeks there had been reports of a potential multi-billion dollar sale of Aon Hewitt. Near the end of last month, Clayton Dubilier & Rice LLC, a buyout company, seemed to have the edge over Blackstone in pre-sale discussions.
As HR Dive reported, Aon’s divestiture of the benefits outsourcing side of the business allows it to focus on both insurance and cybersecurity, the latter being a major growth area. Divestitures, like acquisitions, provide companies with opportunities to focus on their core business and grow in other areas.
In May, Hewitt added Univers, a benefits enrollment and communication firm, to its portfolio. It could prove to be a wise move as companies expand their benefits offerings to attract and retain hires. Blackstone may hold on to Hewitt — which processes workplace benefits for 15% of the U.S. population — or sell it for a substantial profit, as investment firms often do.