CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

CMA dumps probe into Gallagher’s (AJG) $3.25bn Willis Re bid

By Angelique Ruzicka

13:04, 22 November 2021

Willis Towers Watson logo magnified on a computer screen
WTW and Gallagher have escaped the scrutiny of the CMA – Photo: Shutterstock

The Competition and Markets Authority (CMA) has called off a probe into Arthur J. Gallagher & Co’s (AJG) bid to buy the treaty reinsurance business of Willis Towers Watson (WTW), potentially clearing the way for the deal to proceed unhindered.

The UK watchdog said it had made its decision not to refer the merger to a Phase 2 investigation based on the information it currently had.

Treaty reinsurance means reinsuring the whole of an insurance company’s book of business instead of just reinsuring individual risks.

Failed Aon merger

The decision comes several months after WTW agreed to sell Willis Re to Gallagher for $3.25bn (£2.42bn) and follows Aon’s failed attempt at merging with the reinsurance company.

Following the announcement of the Gallagher bid, John Haley, CEO of WTW, said: “Following the termination of the proposed combination with Aon, we have been taking time to reflect on what we have learned about WTW over the last 16 months and determine how we will move forward as an independent company.

“As part of this, we conducted a review of strategic alternatives for Willis Re, our global reinsurance business. While we highly value Willis Re and our colleagues who contribute to its success, we concluded that divestment was the appropriate path for this business and for WTW.”

Competition concerns

The US Department of Justice (DoJ) blocked the $30bn merger between WTW and Aon earlier this year by filing a civil antitrust lawsuit.

Gold

2,047.10 Price
+0.580% 1D Chg, %
Long position overnight fee -0.0196%
Short position overnight fee 0.0114%
Overnight fee time 22:00 (UTC)
Spread 0.50

Oil - Crude

75.98 Price
+0.940% 1D Chg, %
Long position overnight fee -0.0165%
Short position overnight fee -0.0054%
Overnight fee time 22:00 (UTC)
Spread 0.040

BTC/USD

38,442.90 Price
+1.730% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00

US100

15,876.80 Price
-0.320% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 1.8

The DoJ argued that the merger of two of the ‘big three’ global insurance brokers, which was agreed back in March 2020, would see the creation of a broking “behemouth”. It added that this would eliminate the competition, raise prices, and reduce innovation for American businesses.

In July, Aon and Willis agreed to terminate the merger and end their litigation with the DoJ.

CMA to publish decision

The CMA added that the text of the decision to cancel the probe into Gallagher’s bid will be placed on its website “as soon as is reasonably practicable”.  The CMA said it could not expand further on questions from Capital.com about the reasons for its call-off ahead of publication.

WTW PLC’s share price rose 1.91% on the Nasdaq today following the news of the CMA probe withdrawal. Meanwhile, Arthur J. Gallagher & Co’s share price was up slightly (0.37%) on the New York Stock Exchange (NYSE).

The deal is expected to close no later than the end of the first quarter of 2022, subject to regulatory approvals.

Read more: Unilever (ULVR) sells tea business to CVC Capital for €4.5bn

Rate this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 570.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading