Aon Corp. has bought out Hewitt in a cash and stock deal worth about $4.9 billion.
Aon will integrate Hewitt with its existing consulting and outsourcing operations and will operate under the newly created Aon Hewitt brand.
Russ Fradin, chairman and CEO at Hewitt, will serve as chairman and CEO of Aon Hewitt, reporting to Greg Case, CEO at Aon.
"As we continue to grow our business, this merger will give us a broader portfolio of innovative products and services focused on what we believe are two of the most important topics in the global economy today – risk and people," said Case.
The merger is expected to generate about $355 million in annual cost savings for Aon Hewitt in 2013, mostly through reductions in back-office areas, public company costs, and management overlap.
"We are extremely excited to join forces with another iconic global brand to form the leading human capital services enterprise," said Fradin. "This combination allows us to provide even more services for our clients and greater opportunities for our associates. Aon and Hewitt share a relentless commitment to our clients and to the associates who serve them."
An integration team, led by Aon's CAO Greg Besio and consisting of executives from both organizations, will begin planning the transition.
Aon is paying $50 a share, a 41-per-cent premium over Hewitt's closing stock price of $35.40 on July 9. Hewitt stockholders will receive $25.61 in cash and about 0.64 per cent of a share in Aon stock per Hewitt share. The deal is expected to be finalized by mid-November.
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