Blackstone to buy Aon’s outsourcing platform for $4.8bn

April 2017 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

Leading investment firm Blackstone has announced that private equity (PE) funds with which it is affiliated have entered into a definitive agreement to acquire Aon plc’s technology-enabled benefits and human resources (HR) platform for $4.8bn.

The Aon business, currently part of Aon Hewitt, is the largest benefits administration platform in the US and a leading services provider for cloud-based HR management systems. It serves approximately 15 percent of the US working population across more than 1400 companies.

Once the transaction is complete, the new, standalone company will continue to work together with Aon on behalf of shared clients and prospects. In addition, Aon will remain economically aligned with the business’ future performance

Peter Wallace, a senior managing director at Blackstone, said, “We are excited to acquire a world-class leader of scale in health, retirement, and HR services, providing critical human resources and benefits administration services to millions of employees and their families throughout the United States and Canada. Blackstone sees tremendous opportunity for investing in leading businesses within the technology-enabled services sector, where we believe there is a significant opportunity to accelerate future growth. We look forward to working with the excellent management team to continue to invest in and grow the company.”

One of the world’s leading investment firms, Blackstone seeks to create positive economic impact and long-term value for its investors, the companies it invests in and the communities in which it works. Blackstone’s asset management businesses, with over $360bn in assets under management, includes investment vehicles focused on PE, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis.

“We are pleased to invest in this market leading business that provides an important suite of services to a broad range of blue-chip clients,” said David Kestnbaum, a managing director at Blackstone. “Our focus will be on ensuring continued delivery of best-in-class services to clients, while also innovating new service lines and strategies to expand the company’s capabilities.”

A leading global provider of risk management, insurance brokerage and reinsurance brokerage, as well as HR solutions and outsourcing services, Aon plc operates in over 120 countries, providing innovative risk and people solutions via its 72,000 colleagues worldwide.

“This transaction sharpens our focus on growing our core professional services capabilities and accelerates our ability to invest in emerging client needs, while ensuring that clients continue to receive the level of service and performance they have come to expect,” said Greg Case, president and chief executive of Aon plc. “We believe that this platform will thrive under Blackstone’s ownership as a focused, standalone company and look forward to working with the expert management team in place to support our shared clients and prospects.”

Citigroup, Credit Suisse and SMB Capital are acting as financial advisers to Blackstone with respect to the transaction while Kirkland & Ellis LLP is acting as Blackstone’s legal counsel. Morgan Stanley is acting as financial adviser to Aon with respect to the transaction and Sidley Austin LLP is acting as Aon’s legal counsel. Debt financing related to the transaction is being provided by BofA Merrill Lynch, Barclays, Credit Suisse, Citigroup, Macquarie, Deutsche Bank and Morgan Stanley.

The Blackstone/Aon transaction is expected to close by the end of the second quarter of 2017.

Mr Kestnbaum concluded: “Through this investment and partnership, we will seek to leverage our global relationships, operational support and strong capital base to accelerate growth in the business.”

Fraser Tennant