The proposed combination of brokerage giants is currently under investigation by regulators, with concerns centered on potential competition concerns.
For some time now, it has been suggested that WTW may need to consider selling its reinsurance brokerage arm, Willis Re, in order for the merger to meet regulatory requirements.
But sources at L’argus de l’assurance said the Willis Re divestiture may not go far enough for European authorities, leading to speculation that Gras Savoye may also be on the table.
The publication notes that French brokerage is a strong regional asset for WTW with a turnover of 517 million euros in 2019 and a high penetration rate among French SMEs, which means that it is likely to generate a strong interest from potential buyers.
But more than that, it is believed that the sale could be a fairly painless process for WTW, as sources claim that Gras Savoye has remained relatively independent from WTW since its acquisition in 2016, including “completely separate” information systems.
These reports assume that Aon and WTW will have to divestment worth 1.5 billion euros ($ 1.8 billion) before their merger to meet European Competition Directorate standards.
As we stated earlier, the sale of Willis Re alone is expected to fill only 970 million euros ($ 1.15 billion) of that quota, meaning that further sales would be needed to satisfy regulators. Europeans.
Earlier this month, WTW finalized the sale of its specialty brokerage subsidiary, Miller, to Cinven and GIC, which some see as yet another move to avoid competitive challenges.
It is believed that the European Commission may soon be ready to voice its antitrust concerns publicly via a statement of objections, a charge sheet explaining the potential damage to competition resulting from the mega-merger.
However, the merger is also under close scrutiny by other international regulators, with recent reports suggesting that the US Department of Justice may have antitrust concerns regarding the reinsurance aspect of the transaction, as well as in other areas such as benefits and large corporate clients.
Likewise, the Australian Competition and Consumer Commission (ACCC) has warned that the merger could “significantly reduce competition” in Australia following similar statements by New Zealand authorities.