Aon to Acquire Hewitt Associates

Aon, the world’s largest insurance broker, agreed to buy human-resources firm Hewitt Associates in a cash-and-stock deal valued at about $4.9 billion. Aon will pay $50 in cash and stock for Hewitt, which represents a 41% premium over Hewitt’s Friday closing price of $35.40. Hewitt shareholders will receive $25.61 in cash and about 0.64% of an AON share per Hewitt share they own. In total, the payment will be $2.45 billion in cash and 64 million Aon shares. The deal is expected to close by mid-November.

The deal, the largest in Aon’s history, will nearly triple the size of the company’s human-resources operations, making it a $4.3 billion business by revenue. Aon Hewitt, as the combined consulting and outsourcing operations will be known, will be run by Hewitt’s CEO Russ Fradin.

Aon has acquired dozens of firms to expand its insurance and human-resources arms in recent years. The Hewitt deal dwarfs the Chicago-based company’s previous largest deal, the $1.4 billion acquisition of reinsurance broker Benfield Group Ltd. in 2008.