Item 1.01 Entry into a Material Definitive Agreement.
Business Combination Agreement and Conditions Appendix
Business Combination Agreement
On March 9, 2020, Aon plc, a company incorporated under the laws of England and
Wales ("Aon UK"), and Willis Towers Watson Public Limited Company, an Irish
public limited company ("WTW"), entered into a Business Combination Agreement
(the "Business Combination Agreement") with respect to a combination of the
parties (the "Combination").
The Business Combination Agreement provides that, concurrently with or
immediately following the effective date of the previously announced transaction
(as described in Aon UK's Proxy Statement on Schedule 14A, dated and filed with
the U.S. Securities and Exchange Commission (the "SEC") on December 20, 2019,
the "Reorganization") that will change the jurisdiction of incorporation of the
parent company of Aon UK from the United Kingdom to Ireland and result in a new
publicly held parent company incorporated in Ireland ("Aon Ireland"), Aon UK
will assign, and Aon Ireland will assume, all of its rights and obligations
under the Business Combination Agreement (the "Required Assignment").
Under the terms of the Business Combination Agreement, the Combination will be
implemented by means of a court-sanctioned scheme of arrangement under Chapter
1, Part 9 of the Irish Companies Act of 2014 (the "Scheme"). As a result of the
Scheme, WTW will become a wholly owned subsidiary of Aon Ireland.
At the effective time of the Scheme (the "Effective Time"), (a) WTW shareholders
will be entitled to receive 1.08 newly issued Class A ordinary shares, nominal
value $150.00 per share, of Aon Ireland ("Aon Ireland Shares") in exchange for
each ordinary share of WTW held by such holders (the "Scheme Consideration") and
(b) WTW equity awards will be treated as set forth in the Business Combination
Agreement, such that each unexercised WTW option, restricted stock unit,
performance stock unit, phantom stock unit or other equity award that is
outstanding immediately prior to the Effective Time will be converted into a
corresponding award relating to Aon Ireland Shares, with such number of Aon
Ireland Shares subject to such award and, if applicable, the exercise price
applicable to such award determined in accordance with the formulas in the
Business Combination Agreement.
The Business Combination Agreement contemplates a possible second-step merger,
following consummation of the Combination, pursuant to which WTW may be
converted into an Irish private limited company and merged with and into a newly
formed, direct, wholly owned subsidiary of Aon Ireland.
Aon reserves the right, subject to the terms of the Business Combination
Agreement, to elect to implement the Combination by way of a takeover offer (as
such term is defined in the Irish Takeover Panel Act, 1997, Takeover Rules 2013
(the "Irish Takeover Rules")).
Conditions to the Scheme
The conditions to the implementation of the Scheme are set forth in Appendix 3
(the "Conditions Appendix") to the announcement (the "Rule 2.5 Announcement")
issued on March 9, 2020 by Aon UK and WTW pursuant to Rule 2.5 of the Irish
Takeover Rules. Each party's obligation to implement the Scheme is conditional
upon, among other conditions: (a) the approval of the Scheme by a majority in
number of the members of each class of WTW shareholders, present and voting
either in person or by proxy, representing at least 75% in value of the ordinary
shares of WTW of that class held by such holders, at the court meeting of WTW
shareholders, and the approval by Aon shareholders and WTW shareholders of
certain other Combination-related resolutions; (b) the sanction by the High
Court of Ireland of the Scheme and registration of the court order with the
Irish Registrar of Companies; (c) any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with the
Scheme having expired or terminated, and termination or expiration of any
agreements between Aon UK, Aon Ireland and WTW, on the one hand, and the Federal
Trade Commission or the Antitrust Division of the U.S. Department of Justice, on
the other hand, not to consummate the Scheme; (d) the approval by the New York
Stock Exchange of the listing of the Aon Ireland Shares to be issued in
connection with the Scheme; (e) to the extent required, a decision allowing the
closing of the Combination from the European Commission and/or the regulatory
authority of any relevant member state of the European Economic Area following a
referral from the European Commission; (f) all required clearances of any
governmental entity having been obtained and in full force and effect under the
antitrust laws of certain jurisdictions, and certain other regulatory clearances
having been received; (g) the absence of any injunction, restraint or
prohibition by any court or other tribunal, or any law that prohibits the
consummation of the Scheme (other than those related to regulatory clearances
and antitrust laws in jurisdictions that are not closing conditions); (h) the
Business Combination Agreement not having been terminated in accordance with its
terms; (i) the truth and accuracy of the other
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party's representations and warranties in the Business Combination Agreement,
generally subject to a material adverse effect standard; and (j) the performance
and compliance by the other party of all of its covenants and agreements under
the Business Combination Agreement in all material respects.
It is expected that, subject to the satisfaction or waiver of all relevant
conditions, the Combination will be completed in the first half of 2021.
Board of Directors of Aon Ireland
Pursuant to the Business Combination Agreement, at the Effective Time, four
members of the board of directors of WTW (including the Chief Executive Officer
of WTW) will be appointed to the board of directors of Aon Ireland. The Chief
Executive Officer of WTW will become Executive Chairman of Aon Ireland with a
focus on growth and innovation.
Representations, Warranties and Covenants
The Business Combination Agreement contains customary representations,
warranties and covenants by Aon UK and WTW. WTW is subject to certain
restrictions on its ability to solicit alternative acquisition proposals from
third parties, engage in discussion or negotiations with respect to such
proposals or provide non-public information in connection with such proposals,
subject to customary exceptions. In addition, certain covenants require each of
the parties to use, subject to the terms and conditions of the Business
Combination Agreement, their reasonable best efforts to cause the Scheme to be
consummated as promptly as practicable. Subject to certain exceptions, the
Business Combination Agreement also requires each of Aon and WTW to call and
hold shareholder meetings and requires the board of directors of Aon and WTW,
respectively, to recommend approval of the Combination.
Termination
The Business Combination Agreement may be terminated by mutual written consent
of the parties. The Business Combination Agreement also contains certain
customary termination rights, including, among others and subject to certain
conditions, the right of either party if: (a) the requisite approval of the Aon
Ireland shareholders or WTW shareholders is not obtained; (b) the Effective Time
has not occurred by midnight, Eastern time, at the end of the day on March 9,
2021, which period will be extended up to two times, each time for a period of
three months, to provide additional time for certain governmental clearances;
(c) the High Court of Ireland declines to sanction the Scheme; (d) there is any
final and non-appealable injunction, restraint or prohibition by any court or
other tribunal, or any law (other than any antitrust law in a jurisdiction in
which no antitrust clearance is required) that permanently restrains, enjoins,
makes illegal or prohibits the consummation of the Combination; (e) there is an
uncured breach by the other party of any of its representations, warranties,
covenants or agreements in the Business Combination Agreement that would result
in the failure of a closing condition; or (f) the other party's board of
directors changes its recommendation in favor of the Scheme. The Business
Combination Agreement may also be terminated by WTW if the Required Assignment
is not completed by October 9, 2020 (subject to extension at Aon UK's request
with prior approval of WTW (such approval not to be unreasonably withheld,
conditions or delayed). In the event the Business Combination Agreement is
terminated in connection with certain circumstances relating to the failure to
obtain certain antitrust and competition clearances that are conditions to
closing, Aon UK would be obligated to pay to WTW a fee of $1 billion.
Expenses Reimbursement Agreement
On March 9, 2020, Aon UK and WTW entered into an Expenses Reimbursement
Agreement (the "ERA"), the terms of which have been approved by the Irish
Takeover Panel. Under the ERA, each party has agreed to pay the documented,
specific, quantifiable third-party costs and expenses incurred by the other
party, directly or indirectly, in connection with the Combination upon the
termination of the Business Combination Agreement in certain specified
circumstances. The maximum amount payable by either party pursuant to the ERA is
an amount equal to 1% of the aggregate value of the total Scheme Consideration.
Irrevocable Director Undertakings
On March 9, 2020, each member of the board of directors of WTW delivered to Aon
UK a deed of irrevocable undertaking (collectively, the "Director
Undertakings"), pursuant to which each such director agreed, among other things,
to vote his or her shares of WTW in favor of the Scheme and any resolutions
necessary to implement the Scheme. The Director Undertakings represent less than
1% of WTW's outstanding shares as of the close of business on March 8, 2020. The
Director Undertakings will remain in effect if Aon UK elects to effect the
Combination by way of a takeover offer and will
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cease to be binding in certain circumstances, in each case as described therein.
WTW also received a similar deed of irrevocable undertaking from each member of
the board of directors of Aon UK.
The foregoing description of the terms of the Business Combination Agreement,
the Conditions Appendix, the ERA and the Director Undertakings are only
summaries, do not purport to be complete and are qualified in their entirety by
the complete text of the Business Combination Agreement, the Conditions
Appendix, the ERA and the form of Director Undertaking, copies of which are
filed as Exhibits 2.1, 2.2, 2.3 and 10.1 to this Current Report on Form 8-K,
respectively, and are incorporated by reference herein.
The documents attached hereto have been included to provide investors with
information regarding their terms. The Business Combination Agreement contains
representations and warranties made by and to the parties thereto as of specific
dates. The statements embodied in the representations and warranties were made
for purposes of the agreement between the parties and may be subject to
qualifications and limitations agreed by the parties in connection with
negotiating the terms of such agreement. In addition, certain representations
and warranties were made as of a specified date, may be subject to a contractual
standard of materiality different from those generally applicable to investors
or may have been used for the purpose of allocating risk between the parties
rather than establishing matters as facts.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
2.1 Business Combination Agreement, dated March 9, 2020, between Aon UK
and WTW.*
2.2 Appendix 3 to the Rule 2.5 Announcement, dated March 9, 2020
(Conditions Appendix).
2.3 Expenses Reimbursement Agreement, dated March 9, 2020, between Aon UK
and WTW.
10.1 Form of Irrevocable Director Undertaking.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. Aon UK hereby undertakes to furnish supplemental copies of any
of the omitted exhibits and schedules upon request by the SEC; provided,
however, that Aon UK may request confidential treatment pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended, for any exhibits or
schedules so furnished.
NO OFFER OR SOLICITATION
This communication is for information purposes only and is not intended to and
does not constitute, or form part of, an offer, invitation or the solicitation
of an offer or invitation to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of any securities, or the solicitation of any vote or approval
in any jurisdiction, pursuant to the proposed combination or otherwise, nor
shall there be any sale, issuance or transfer of securities in any jurisdiction
in contravention of applicable law. In particular, this communication is not an
offer of securities for sale into the United States. No offer of securities
shall be made in the United States absent registration under the U.S. Securities
Act or pursuant to an exemption from, or in a transaction not subject to, such
registration requirements. Any securities issued as a result of the proposed
combination by means of a scheme of arrangement are anticipated to be issued in
reliance upon the exemption from the registration requirements of the U.S.
Securities Act pursuant to the exemption from registration set forth in
Section 3(a)(10) thereof. Subject to the provisions of the Business Combination
Agreement and with the Irish Takeover Panel's consent, the proposed combination
will be implemented solely by means of the Scheme documentation, which will
contain the full terms and conditions of the proposed combination, including
details of how Aon Ireland and WTW shareholders may vote in respect of the
proposed combination.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
Aon Ireland and WTW will prepare a joint proxy statement (which will contain the
Scheme documentation) to be distributed to Aon Ireland shareholders and WTW
shareholders, containing further information relating to the implementation of
the proposed combination, the full terms and conditions of the Scheme, notices
of the Aon Ireland and the WTW shareholders meetings and information on the
Class A ordinary shares of Aon Ireland to be issued under the proposed
combination. The joint proxy statement will be filed with the U.S. Securities
and Exchange Commission (the "SEC"). This document, if and
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when filed, as well as Aon UK's, Aon Ireland's and WTW's other public filings
with the SEC, may be obtained without charge at the SEC's website at www.sec.gov
and, in the case of Aon UK's and Aon Ireland's filings, at Aon UK's website at
ir.aon.com, and in the case of WTW's filings, at WTW's website at
investors.willistowerswatson.com. BEFORE MAKING ANY VOTING DECISION, HOLDERS OF
AON UK, AON IRELAND AND/OR WTW SECURITIES ARE URGED TO READ THOSE FILINGS AND
ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION
WITH THE PROPOSED COMBINATION, INCLUDING ANY DOCUMENTS INCORPORATED BY REFERENCE
THEREIN, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED COMBINATION AND THE
PARTIES TO THE PROPOSED COMBINATION. Any vote in respect of resolutions to be
proposed at the WTW shareholders meetings to approve the proposed combination,
the Scheme or related matters, or other responses in relation to the proposed
combination, should be made only on the basis of the information contained in
the joint proxy statement (including the Scheme documentation). Similarly, any
vote in respect of resolutions to be proposed at the Aon Ireland shareholders
meeting to approve the issuance of Class A ordinary shares of Aon Ireland under
the proposed combination should be made only on the basis of the information
contained in the joint proxy statement (including the Scheme documentation).
PARTICIPANTS IN THE SOLICITATION
Aon UK, Aon Ireland, WTW and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from
shareholders in connection with the proposed combination. Information regarding
the persons who may, under the rules of the SEC, be deemed to be participants in
the solicitation of shareholders, including a description of their direct or
indirect interests, by security holdings or otherwise, will be set forth in the
joint proxy statement. Additional information about Aon UK's directors and
executive officers is contained in Aon UK's Annual Report on Form 10-K for the
year ended December 31, 2019, filed with the SEC on February 14, 2020, and its
Proxy Statement on Schedule 14A, dated and filed with the SEC on April 26, 2019.
Additional information about WTW's directors and executive officers is contained
in WTW's Annual Report on Form 10-K for the year ended December 31, 2019, filed
with the SEC on February 26, 2020, and its Proxy Statement on Schedule 14A,
dated and filed with the SEC on April 3, 2019.
FORWARD-LOOKING STATEMENTS
This communication contains certain statements that are forward-looking, as that
term is defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are prospective in nature and are not based on
historical facts, but rather on current expectations of management about future
events. Forward-looking statements can often, but not always, be identified by
the use of words such as "plans," "expects," "is subject to," "budget,"
"scheduled," "estimates," "forecasts," "potential," "continue," "intends,"
"anticipates," "believes" or variations of such words, and statements that
certain actions, events or results "may," "could," "should," "would," "might" or
"will" be taken, occur or be achieved. Although management believes that the
expectations reflected in these forward-looking statements are reasonable, it
can give no assurance that these expectations will prove to be correct. By their
nature, forward-looking statements involve risks and uncertainties because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by the forward-looking
statements. Such factors include, but are not limited to, the possibility that
the proposed combination will not be consummated, failure to obtain necessary
shareholder or regulatory approvals or to satisfy any of the other conditions to
the proposed combination, adverse effects on the market price of Aon UK, Aon
Ireland and/or WTW securities and on Aon UK's, Aon Ireland's and/or WTW's
operating results for any reason, including, without limitation, because of the
failure to consummate the proposed combination, the failure to realize the
expected benefits of the proposed combination (including anticipated revenue and
growth synergies), the failure to effectively integrate the combined companies
following consummation of the proposed combination, negative effects of an
announcement of the proposed combination, changes in global, political,
economic, business, competitive, market and regulatory forces, future exchange
and interest rates, changes in tax laws, regulations, rates and policies, future
business acquisitions or disposals, or any announcement relating to the
consummation of or failure to consummate the proposed combination on the market
price of Aon UK, Aon Ireland and/or WTW securities, significant transaction and
integration costs or difficulties in connection with the proposed combination
and/or unknown or inestimable liabilities, potential litigation associated with
the proposed combination, the potential impact of the announcement or
consummation of the proposed combination on relationships, including with
suppliers, customers, employees and regulators, and general economic, business
and political conditions (including any epidemic, pandemic or disease outbreak)
that affect the combined companies following the consummation of the proposed
combination. The factors identified above are not exhaustive. Aon UK, Aon
Ireland, WTW and their subsidiaries operate in a dynamic business environment in
which new risks may emerge frequently. Other unknown or unpredictable factors
could also cause actual
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results and developments to differ materially from those expressed or implied by
the forward-looking statements. Forward-looking statements should therefore be
construed in the light of such factors. You are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of the date
made. Further information concerning Aon UK and its businesses, including
economic, competitive, governmental, regulatory, technological and other factors
that could materially affect Aon UK's results of operations and financial
condition (and which shall apply equally to Aon Ireland following the effective
date of the Reorganization), is contained in Aon UK's filings with the SEC. See
Aon UK's Annual Report on Form 10-K for the year ended December 31, 2019, filed
with the SEC on February 14, 2020, and additional documents filed by Aon UK
and/or Aon Ireland with the SEC for a further discussion of these and other
risks and uncertainties applicable to Aon UK's and Aon Ireland's businesses.
Further information concerning WTW and its businesses, including economic,
competitive, governmental, regulatory, technological and other factors that
could materially affect WTW's results of operations and financial condition, is
contained in WTW's filings with the SEC. See WTW's Annual Report on Form 10-K
for the year ended December 31, 2019, filed with the SEC on February 26, 2020,
and additional documents filed by WTW with the SEC for a further discussion of
these and other risks and uncertainties applicable to WTW's businesses. Any
forward-looking statements in this communication are based upon information
available as of the date of this communication which, while believed to be true
when made, may ultimately prove to be incorrect. Other than in accordance with
legal or regulatory obligations, none of Aon UK, Aon Ireland or WTW is under any
obligation, and each expressly disclaims any intention or obligation, to update
or revise any forward-looking statement, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward-looking
statements attributable to Aon UK, Aon Ireland, WTW and/or any person acting on
behalf of either of them are expressly qualified in their entirety by the
foregoing.
Statement Required by the Irish Takeover Rules
The directors of Aon UK accept responsibility for the information contained in
this communication relating to Aon UK, the directors of Aon UK and members of
their immediate families, related trusts and persons connected with them, except
for the statements made by WTW in respect of Aon UK or Aon Ireland. To the best
of the knowledge and belief of the directors of Aon UK (who have taken all
reasonable care to ensure such is the case), the information contained in this
communication for which they accept responsibility is in accordance with the
facts and does not omit anything likely to affect the import of such
information.
The directors of WTW accept responsibility for the information contained in this
communication relating to WTW and the directors of WTW and members of their
immediate families, related trusts and persons connected with them, except for
the statements made by Aon UK in respect of WTW. To the best of the knowledge
and belief of the directors of WTW (who have taken all reasonable care to ensure
such is the case), the information contained in this communication for which
they respectively accept responsibility is in accordance with the facts and does
not omit anything likely to affect the import of such information.
DEALING DISCLOSURE REQUIREMENTS
Under the provisions of Rule 8.3 of the Irish Takeover Rules, if, during an
"offer period," any person is, or becomes "interested" (directly or indirectly)
in 1 per cent. or more of any class of "relevant securities" of Aon UK, Aon
Ireland or WTW, all "dealings" in any "relevant securities" of Aon UK, Aon
Ireland or WTW (including by means of an option in respect of, or a derivative
referenced to, any such relevant securities) must be publicly disclosed by no
later than 3.30pm (Eastern time) in respect of the relevant securities of Aon
UK, Aon Ireland and WTW on the business day following the date of the relevant
transaction. The requirement will continue until this offer period ends. If two
or more persons co-operate on the basis of any agreement, either express or
tacit, either oral or written, to acquire an interest in relevant securities of
Aon UK, Aon Ireland or WTW, they will be deemed to be a single person for the
purposes of Rule 8.3 of the Irish Takeover Rules. Under Rule 8.1 of the Irish
Takeover Rules, all dealings in relevant securities of WTW by Aon UK or Aon
Ireland, or relevant securities of Aon UK or Aon Ireland by WTW, or by any party
acting in concert with either of them must also be disclosed by no later than 12
noon (Eastern time) in respect of the relevant securities of Aon UK, Aon Ireland
and WTW on the business day following the date of the relevant transaction.
Interests in securities arise, in summary, when a person has a long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an interest by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities. Terms used in this
paragraph should be read in light of the meanings given to those terms in the
Irish Takeover Rules. If you are in any doubt as to whether or not you are
required to disclose dealings under Rule 8 of the Irish Takeover Rules, consult
with the Irish Takeover Panel's website at www.irishtakeoverpanel.ie or contact
the Irish Takeover Panel by telephone on +353 1 678 9020.
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