Aon plc · NYSE:AON
Aon — Merger or Acquisition (July 2010)
21 slides from Aon's merger presentation, Jul 12, 2010
Slide 1: Hewitt Merger with Aon Corporation
Hewitt Merger with Aon Corporation Presentation to Investors July 12, 2010
Slide 2: Safe Harbor Statement
Safe Harbor Statement This communication contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These
Slide 3: Additional Information
Additional Information This communication does not constitute an offer to sell or the solicitation of an offer to buy our securities or the solicitation of any vote or approval. This communication is being made in respect of the proposed transaction involving Aon and Hewitt. In connection with the p
Slide 4: Strengthens Leadership Position in Risk and People
Strengthens Leadership Position in Risk and People ¾ Substantially strengthens the core strategy of Aon – to be the “Preeminent Professional Services Firm” in the world focused on risk and people ¾ Upon completion of the merger, Aon will be the global leader in Risk and Human Capital Solutions #1 AD
Slide 5: Highlights of Transaction
Highlights of Transaction ¾ Hewitt will merge with Aon for $50 per share, consisting, on a fully diluted basis, of 50% cash and 50% Aon stock, based on the closing price of Aon stock on July 9, 2010 ¾ Consideration reflects a multiple of 7.5x Hewitt’s FY2010 consensus estimates EBITDA ¾ Creates glob
Slide 6: Strategic Rationale – Aon Hewitt
Strategic Rationale – Aon Hewitt The merger of Hewitt with Aon will create a global leader in human capital solutions with the following strengths: ¾ Combined Aon Hewitt revenues of $4.3 billion and 29,000 associates globally ¾ Leading global brand and client service recognized worldwide ¾ Complemen
Slide 7: Highly Complementary Product and Service Portfolio
Highly Complementary Product and Service Portfolio ¾ Combination creates industry-leading product and service portfolio ¾ High mix of recurring revenues ¾ Business lines focused on growth segments of the market Aon Hewitt FY09 Net Revenue Aon Consulting Hewitt $4.3 billion FY09 Revenue FY09 Net Reve
Slide 8: Significant Cross-Sell Opportunities
Significant Cross-Sell Opportunities Leverage Hewitt’s brand strength Leverage Aon’s brand strength and and product and services portfolio product and services portfolio through Clients through Aon’s extensive middle Hewitt’s extensive large corporate market client base client base Cross-sell Aon’s
Slide 9: Strengthens Combined Client-Serving Capabilities
Strengthens Combined Client-Serving Capabilities Hewitt Aon Consulting Globally recognized as one of the foremost HR Strong brand in middle market benefits Brand consulting and outsourcing providers Industry-leader in global large corporate Approximately $200 million outsourcing practice Ben
Slide 10: Expect to Deliver $355 million of Synergies
Expect to Deliver $355 million of Synergies ¾ Expect to deliver $355 million of annual savings in 2013 ¾ Savings represent 10% of Aon Hewitt’s FY2009 operating expense base $440 $420 ¾ EPS accretion is driven primarily by cost reductions $400 $380 $ in millions $355 Revenue $360 $340 $318 - 335 ¾ Mi
Slide 11: Long-Term Operating Margin in Aon Hewitt of 20%
Long-Term Operating Margin in Aon Hewitt of 20% ¾ Primary drivers of expected operating margin improvement include: $355 million of synergies, decreasing intangible amortization expense and operational improvement in HR BPO ¾ Expect to achieve long-term operating margin in Aon Hewitt of 20% Aon Hewi
Slide 12: Transaction Delivers Increased Shareholder Returns
Transaction Delivers Increased Shareholder Returns Estimated EPS Accretion / Dilution 2011 2012 2013 EPS - GAAP -8.4% 1.2% 5.8% EPS - Adjusted¹ 1.2% 5.4% 5.8% ¾ We expect the transaction to be accretive on a GAAP EPS basis in 2012 and on an Adjusted EPS basis in 2011 ¾ We expect the transaction to b
Slide 13: Strong Cash Flow Generation (EBITDA)
Strong Cash Flow Generation (EBITDA) ¾ Aon and Hewitt generated $2.2 billion of total EBITDA in FY2009 ¾ Aon and Hewitt combined will provide greater cash flow flexibility to create long-term shareholder value ¾ High mix of recurring revenue and complementary product portfolio provides greater cash
Slide 14: Expect to Create $1.5 billion of Shareholder Value
Expect to Create $1.5 billion of Shareholder Value ¾ $1.5 billion of value creation represents the Discounted Cash $6.4B Flow (DCF) value of Hewitt plus $1.5B synergies, less the purchase price $4.9B ¾ Transaction creates significant value through net run-rate synergies of $355 million ¾ Transaction
Slide 15: Expect to Maintain Investment Grade Credit Ratings
Expect to Maintain Investment Grade Credit Ratings ¾ Transaction will be financed with 50% cash and 50% stock in order to maintain current investment grade credit ratings of BBB+/Baa2 ¾ Credit benefits of the transaction include: - Increased revenue base - Increased diversity of revenue base - Incre
Slide 16: Transaction Terms and Timing / Major Milestones
Transaction Terms and Timing / Major Milestones Transaction Terms: ¾ Hewitt will merge with Aon for $50 per share, consisting, on a fully diluted basis, of 50% cash and 50% Aon stock, based on the closing price of Aon stock on July 9, 2010 ¾ Aggregate fully diluted equity value of the transaction is
Slide 17: Q&A
Q&A AION .
Slide 18: Appendix 1 – Reconciliation of Operating Income
Appendix 1 – Reconciliation of Operating Income Ao n C o r p or a t io n ($ in m i ll io n s ) F Y 07 F Y 08 F Y 09 C o n s u lt in g re v e n u e $ 1 ,3 4 5 $ 1 ,3 5 6 $ 1 ,2 6 7 In c o m e f ro m c on t in u in g o p e ra ti o ns b e f o re t a x e s - a s re p o rt e d $ 180 $ 208 $ 203 R e s tr
Slide 19: Appendix 2 – Reconciliation of Operating Income
Appendix 2 – Reconciliation of Operating Income H e w it t A s s o c ia t e s , In c . ($ in m i ll io n s ) F Y 07* F Y 08* F Y 09 R e p o rt e d n e t r e v e n u e $ 2 ,9 2 1 $ 3 ,1 5 1 $ 3 ,0 0 4 A d j u s tm e n ts H R B P O d i v e s ti tu r e s $ (21 ) $ (32 ) $ - H R B P O c o n t r a c t r
Slide 20: Appendix 3 – Reconciliation of EBITDA
Appendix 3 – Reconciliation of EBITDA Aon Corporation ($ in millions) FY0 7 FY0 8 FY0 9 Tota l rev enue $ 7,2 34 $ 7,5 28 $ 7,5 95 Income from c ontinuing opera ti ons before taxe s - as reported $ 1,0 03 $ 9 40 $ 1,0 21 Restructuring $ 85 $ 2 54 $ 4 12 Pen sion curtailm ent - 8 (78) Ben fie ld inte
Slide 21: Appendix 4 – Reconciliation of EBITDA
Appendix 4 – Reconciliation of EBITDA H e w it t A s s o c ia t e s , In c . ($ in m i ll io n s ) F Y07 * F Y 08* F Y0 9 R e p o rt e d n e t r e v e n u e $ 2 ,9 2 1 $ 3 ,1 5 1 $ 3 ,0 0 4 A d j u s tm e n ts H R B P O d i ve sti tu r e s $ (21) $ (32 ) $ - H R B P O c o n tr a c t r e s tr u c tu