Aon (AON) shares fell 1.8% in Monday premarket trading after the insurance broker disclosed an agreement to acquire USI Insurance Services from KKR (KKR) for about $17 billion, a figure that includes the target's outstanding debt.
The companies confirmed the transaction on Monday. The announcement followed a Wall Street Journal report on Sunday that said the deal was imminent.
USI, headquartered in Valhalla, New York, operates as an insurance brokerage and consulting business that places policies and helps design employee benefit programs for companies and individuals. The firm reports roughly $3 billion in annual revenue, per information on its website.
KKR originally purchased USI from private-equity firm Onex in 2017, in a transaction that also involved Canadian investment manager CDPQ, for $4.3 billion. Since that acquisition KKR has made further investments to increase its stake and has become the largest shareholder in USI.
Aon describes itself as a provider of risk management, health benefits and retirement wealth services. The company said purchasing USI will broaden its capabilities in serving midsize businesses and that the transaction is expected to be accretive to earnings per share by 2028.
The deal is the latest example of KKR divesting assets as the private-equity industry addresses a backlog of holdings. In the most recent reporting period KKR recorded $1.29 billion in asset sales, its highest quarterly total to date.
Market and sector implications
- Insurance and benefits brokerage sector - Aon expands scale in the midsize business segment through the acquisition of USI.
- Private equity and asset management - KKR continues to exit portfolio holdings as part of broader asset-sale activity.
- Financial markets - Aon shares moved lower in premarket trade on the news of the transaction.
Deal specifics
- Acquiror: Aon.
- Target: USI Insurance Services, based in Valhalla, N.Y.
- Seller: KKR, which increased its ownership since acquiring USI with partners in 2017.
- Price: Approximately $17 billion including debt.
- USI annual revenue: Roughly $3 billion.
- Prior 2017 purchase price: $4.3 billion, paid by KKR and CDPQ from Onex.
- KKR recent asset sales: $1.29 billion in the latest period.
Context and expectations
Aon said the acquisition will strengthen its ability to serve midsize customers and that it expects the transaction to contribute to higher earnings per share by 2028. The announcement comes as KKR continues to pare holdings from a backlog of portfolio assets, reporting a record quarterly figure for asset sales in the most recent period.