Aon drops plans to pursue Willis Towers Watson merger

AON has scrapped plans to strike a merger deal with rival broker Willis Towers Watson, ending a day of fevered speculation over what could have resulted in the insurance sector’s largest ever tie-up.

Just 24 hours after Aon first confirmed that it was in the early stages of weighing up an all-stock offer for Irish-based Willis Tower Watson, the firm said that it will not buy the world’s third biggest broker.

Aon, which has seen its shares jump more than six per cent in early trading, has not provided any explanation for backing off from the deal.

According to Aon, the firm was forced to confirm that it was in early stage talks with Willis Towers as a result of Irish regulatory requirements. In a statement today it added: "As a result of media speculation, those regulations required Aon to make the disclosure at a very early stage in the consideration of a potential all-share business combination."

A deal between the two would have created a business with a market capitalisation in excess of $60bn (£45bn).

Read more: Aon confirms interest in multi-billion tie-up with Willis Towers Watson

Yesterday Aon said: "The company emphasises that, at this point, its evaluation of a potential transaction is at a preliminary stage and there can be no certainty that any transaction will take place nor as to the form or terms on which any transaction might be pursued."

Last night Willis Towers Watson’s shares closed up five per cent at $182.04, while Aon closed down nearly eight per cent on $157.13.