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February 9, 2017
martin wolf  Transaction Analysis
Blackstone Said to Acquire Aon's Benefits Outsourcing Business
 
Financial Information*
  • Enterprise Value                          $4.8 billion
Transaction Facts
  • According to a report in Reuters Thursday, private equity firm Blackstone Group LP (NYSE: BX)  has agreed to acquire the employee benefits outsourcing business of Aon Plc (NYSE: AON)
  • The report comes on the eve of Aon's Q4 2016 earnings announcement, which is expected to be released before the market opens on Feb. 10, 2017.
  • Aon is an insurance brokerage headquartered in London and active in 120 countries. It acquired the benefits outsourcing business it is selling to Blackstone in its 2010 acquisition of Hewitt Associates for $4.9 billion.
  • The employee benefits outsourcing business processes work benefits for 15 percent of the population of the US.
All About Focus
  • Cutting Loose the Anchor: Benefits outsourcing is a mature industry and is capital-intensive - two factors that limit its appeal to strategic owners. Aon's acquisition of Hewitt was designed to increase synergies and broaden its consulting portfolio - but today, a sale would free up capital for investment in hotter growth areas such as cybersecurity or health insurance.
  • Surprise!: Though the sale is not a surprise - media reports earlier this month reported that the sale was nearly complete - the buyer's identity is. Previous reports had fingered Clayton Dubilier & Rice as the winner, with operating partner Russell Fradin having the advantage of being Aon Hewitt's CEO from 2006 - 2011.
  • Beauty in the Eye of the Beholder: Though strategics have been less interested in administrative outsourcing companies, private equity firms have swept in to meet demand attracted by strong cash flows. Previous similar transactions include September's acquisition of a minority stake in Sedgwick Claims Management Services (owned by KKR and Stone Point Capital) by Canadian pension fund manager Caisse de dépôt et placement du Québec.
For more information about this transaction,  click here to read the article .

*Financial information from Reuters report.

martinwolf was not the advisor in this transaction.

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With offices in New York and the San Francisco Bay Area, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 150 transactions in over 20 countries and sold seven divisions of Fortune 500 companies. 

 

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