Analyst Note| Brett Horn, CFA |
As part of its proposed merger with Aon, Willis Towers Watson had agreed to sell a portion of its Willis Re business. After the Aon deal fell through, management had announced that it would continue to look at a sale of this business. That has now played out, with Willis Towers Watson agreeing to sell the Willis Re treaty reinsurance brokerage operations to Arthur Gallagher, the original buyer, for $3.25 billion plus potential additional consideration of up to $750 million based on three-year revenue targets. Based on data provided by Arthur Gallagher, the base price equates to 12.3 times EBITDA, which we view as reasonable. We will maintain our $206 fair value estimate and narrow moat rating.