The employee benefits outsourcing business belonging to insurance broker Aon Plc has been agreed to be acquired and taken over by private equity firm Blackstone Group LP. According to media reports quoting sources and people who have knowledge about the sale off, the deal is worth a total of around $4.8 billion.
The business that is proposed to be takeover has the profile of processesing work related benefits for 15 percent of the U.S. population and there for the deal gives Blackstone ownership to that entire business at one go.
On the other hand, Aon would be allowed to further invest in growth areas beyond its core insurance brokerage operations, such as cyber security and health insurance as the company would be allowed to exit a business that has attained maturity and is capital-intensive and outsourcing in nature.
The sources reportedly claimed that Blackstone has provided assurances it can successfully carve out the unit and hence, in an auction for the benefits administration and human resources business process outsourcing platform of Aon, it had managed to prevail in the deal over buyout firm Clayton Dubilier & Rice LLC (CD&R).
The media reports said that the sources asked not to be identified because the negotiations are confidential. While Blackstone could not immediately be reached for comment, Aon and CD&R declined to comment.
Headquartered in London, Aon is an insurance brokerage active in more than 120 countries. As part of its acquisition in 2010 of Hewitt Associates Inc for $4.9 billion, the benefits outsourcing unit was taken over by Aon which it has now agreed to sell to Blackstone.
"The potential divestiture of the outsourcing business moves Aon away from the most mature and lower growth area of the business. Selling the benefits administration business would therefore be consistent with the actions to improve the business mix," William Blair analysts wrote in a note on Jan. 23, after Reuters reported that Aon was in talks to sell the unit.
Since such operations can generate strong cash flows, therefore businesses that help companies cut costs by outsourcing large parts of their administrative functions have attracted private equity firms who have been prolific investors in such sort of businesses. Such takeover generally sees the investors seeking to sell ownership of those assets at a big profit a few years after they invest in the business.
Sedgwick Claims Management Services Inc, which specializes in workers' compensation and is owned by buyout firms KKR & Co LP (KKR.N) and Stone Point Capital LLC, was announced to grant a minotiry stake in its business to Canadian pension fund manager Caisse de dépôt et placement du Québec for a minority stake that was worth $500 million. The announcement was made in September.
With the aim of obtaining a minority stakes in Kronos Inc, a workforce management solutions company controlled by buyout firm Hellman & Friedman LLC, Blackstone and Singaporean sovereign wealth fund GIC invested $750 million in 2014 and this another example of investment firms taking interests in firms engaged in outsourced administrative business.
(Source:www.reuters.com)
The business that is proposed to be takeover has the profile of processesing work related benefits for 15 percent of the U.S. population and there for the deal gives Blackstone ownership to that entire business at one go.
On the other hand, Aon would be allowed to further invest in growth areas beyond its core insurance brokerage operations, such as cyber security and health insurance as the company would be allowed to exit a business that has attained maturity and is capital-intensive and outsourcing in nature.
The sources reportedly claimed that Blackstone has provided assurances it can successfully carve out the unit and hence, in an auction for the benefits administration and human resources business process outsourcing platform of Aon, it had managed to prevail in the deal over buyout firm Clayton Dubilier & Rice LLC (CD&R).
The media reports said that the sources asked not to be identified because the negotiations are confidential. While Blackstone could not immediately be reached for comment, Aon and CD&R declined to comment.
Headquartered in London, Aon is an insurance brokerage active in more than 120 countries. As part of its acquisition in 2010 of Hewitt Associates Inc for $4.9 billion, the benefits outsourcing unit was taken over by Aon which it has now agreed to sell to Blackstone.
"The potential divestiture of the outsourcing business moves Aon away from the most mature and lower growth area of the business. Selling the benefits administration business would therefore be consistent with the actions to improve the business mix," William Blair analysts wrote in a note on Jan. 23, after Reuters reported that Aon was in talks to sell the unit.
Since such operations can generate strong cash flows, therefore businesses that help companies cut costs by outsourcing large parts of their administrative functions have attracted private equity firms who have been prolific investors in such sort of businesses. Such takeover generally sees the investors seeking to sell ownership of those assets at a big profit a few years after they invest in the business.
Sedgwick Claims Management Services Inc, which specializes in workers' compensation and is owned by buyout firms KKR & Co LP (KKR.N) and Stone Point Capital LLC, was announced to grant a minotiry stake in its business to Canadian pension fund manager Caisse de dépôt et placement du Québec for a minority stake that was worth $500 million. The announcement was made in September.
With the aim of obtaining a minority stakes in Kronos Inc, a workforce management solutions company controlled by buyout firm Hellman & Friedman LLC, Blackstone and Singaporean sovereign wealth fund GIC invested $750 million in 2014 and this another example of investment firms taking interests in firms engaged in outsourced administrative business.
(Source:www.reuters.com)
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