12 July, 2010

Aon Corp to buy Hewitt for about $4.9 billion

Insurance broker Aon Corp. said on Monday it agreed to buy human resources company Hewitt Associates for $4.9 billion in cash and expand its consulting operations. The deal will help Aon get a firm foothold in human resource and benefits outsourcing and take on rival insurance broker Marsh and McLennan's MNC.N Mercer unit.

Aon plans to integrate Hewitt with its existing consulting and outsourcing operations and sees annual revenue of $4.3 billion for the combined entity, which will be named Aon Hewitt. Russ Fradin, chairman and chief executive officer of Hewitt, will head Aon Hewitt. Aon expects the deal to add to 2011 and 2012 earnings and generate about $355 million in annual cost savings in 2013, primarily from reduction in back-office areas.

The Aon-Hewitt deal is the second major deal in the consultancy space in a year after Towers Perrin and Watson Wyatt agreed to a $3.5 billion merger to create the world's largest HR consultants. The deal is expected to close by mid-November.