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UK Regulator Launches Investigation Into Gallagher/Willis Re Deal

Arthur J. Gallagher & Co. said CMA’s move is part of the usual regulatory oversight for any significant acquisition.
  • Frank Klimko
  • November 2021
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The United Kingdom's Competition and Markets Authority has opened an antitrust investigation into the impact of the proposed Arthur J. Gallagher & Co.'s acquisition of Willis Re's treaty business over whether it will impede competition in U.K. markets.

The CMA is considering whether the deal “will result in the creation of a relevant merger and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services,” the CMA said in a statement seeking public comments. The comment window closed Oct. 19.

The CMA set a Nov. 29 deadline to announce whether to refer the merger for a Phase 2 investigation, it said. The transaction is expected to close in the fourth quarter of 2021, pending regulatory approvals in multiple jurisdictions.

In a statement, Gallagher said the move by the CMA was part of the usual regulatory oversight. “The announcement today from the CMA is a standard part of the process for any significant acquisition,” it said.

Earlier this year, AJG announced it would acquire the Willis Re combined operations for an initial gross consideration of $3.25 billion, and potential additional consideration of $750 million subject to certain third-year revenue targets, the company said. AJG intended to finance the transaction using cash on hand, including the $1.4 billion of net cash raised through a May 17 follow-on common stock offering and $850 million of net cash borrowed via its May 20 30-year senior note issuance, short-term borrowings and additional free cash generated before close, the company said at the time.

The Willis Re treaty business has a client list of more than 750 insurance and reinsurance carriers, operates in 24 countries and places more than $10 billion in annual premiums, the company said. About 45% of Willis Re's ceded treaty business is in North America, 40% in the United Kingdom and 15% around the rest of the world including Australia, Singapore, Japan, Germany and elsewhere.

AJG announced the deal shortly after Aon terminated its $30 billion Willis Towers Watson acquisition. The merger was struck, Aon said, after it was presented with unacceptable U.S. Department of Justice antitrust remedies, which would have crippled its U.S. businesses, and a litigation time line that stretched too far into the future.



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