Aon agrees to sell employee benefits outsourcing business to Blackstone Group for up to $4.8 billion

News Hour:

Insurance broker Aon Plc said on Friday it agreed to sell its employee benefits outsourcing business to private equity firm Blackstone Group LP for up to $4.8 billion.

Blackstone will pay $4.3 billion upfront and up to an additional $500 million based on future performance. London-headquartered Aon said it expected the deal to improve its return on invested capital and add to adjusted earnings per share in 2018, reports Reuters.

Proceeds from the deal after tax are expected to be about $3 billion, subject to customary working capital and other adjustments, Aon said.

The company said it expects to use part of the proceeds to buy back shares and raised its repurchase program by $5 billion to $7.7 billion.

Reuters first reported the news on Thursday, citing sources who said Blackstone prevailed over buyout firm Clayton Dubilier & Rice LLC in an auction for the deal.

The deal allows Aon to exit a mature, capital-intensive outsourcing business and focus on growth areas such as cyber security and health insurance. It also gives Blackstone ownership of a business that processes work benefits for 15 percent of the U.S. population.

Private equity firms have been keen investors in businesses that help companies cut costs by outsourcing large parts of their administrative functions since such operations can generate strong cash flows.

Blackstone will have to pay Aon a termination fee of $215 million if the agreement falls through, Aon said in a filing. Aon also reported better-than-expected fourth-quarter earnings, helped by strength in its retail business.

The company’s net income attributable to shareholders fell to $502 million, or $1.87 per share, in the fourth quarter ended Dec. 31, from $584 million, or $2.09 per share, a year earlier.

Total revenue rose about 1.1 percent to $3.32 billion, while revenue in the outsourcing business increased 1.8 percent to $854 million. Morgan Stanley was Aon’s financial adviser while Citigroup, Credit Suisse, and SMB Capital advised Blackstone.

Avatar

This article has been posted by a News Hour Correspondent. For queries, please contact through [email protected]
No Comments

Translate this News

Join the Facebook Group

Click here to join the Facebook group of News Hour

Popular Posts

Sacred Games exposes Rajshri Deshpande nude [video]
Yageo Corp to acquire Kemet Corp in a $1.8 billion deal
Paperfly launches delivery services covering 64 districts in Bangladesh
Anurag Kashyap shoots Kubra Saith 7 times nude and made her cry for frontal nudity scene [Video]
Bolivian opposition senator Jeanine Áñez declared herself interim president
A ransomware attack hit computer servers and halted administrative work at Pemex

Advertisement

News of the Month

February 2017
S M T W T F S
« Jan   Mar »
 1234
567891011
12131415161718
19202122232425
262728  
Scroll Up
%d bloggers like this: