Aon: Acquiring NFP for $13.4 Billion

Aon announced that it intends to acquire NFP, an insurance broker focused on middle-market clients. The price will be $13.4 billion, with $7 billion in cash and the rest in Aon shares. Aon has a history of significant mergers and acquisitions, and we had wondered what management might do after regulators blocked its attempt to acquire Willis Towers Watson. The answer appears to be to look for similar but somewhat smaller deals. While we would have preferred to see the company shift toward a focus on organic opportunities, we are pleased to see that Aon is not trying to expand into unrelated areas. We see the strategic fit as reasonable, if not especially compelling. NFP has a similar mix of business as Aon but is weighted more toward the consulting side.