AON to Sell Pension Business to Lane Clark & Peacock LLP in Germany

Aon (AON) is selling its pension business in Germany as it seeks to secure regulatory approval to merge with Willis Towers Watson (WLTW). The global professional services firm will sell the unit to U.K.-based consultancy firm Lane Clark & Peacock LLP (LCP).

The sell-off will resolve concerns raised by the European Commission about the markets in which Aon and Willis Towers Watson, a global advisory company, operate. The two companies are seeking regulatory approval in all relevant jurisdictions, including the U.S.

According to Aon’s CEO Greg Case, the divestment affirms Aon’s commitment to closing the proposed merger with Willis Towers Watson. (See Aon stock analysis on TipRanks)

Watson stated, “We recognize the significant contributions these colleagues have made on behalf of our clients during their time with Aon. Lane Clark & Peacock shares with us a culture of innovation and excellence and we know these colleagues have a positive future at LCP.”

LCP stands to become a leading pension consultancy firm in Germany once the deal closes. The acquisition will allow the U.K.-based firm to diversify into the third largest pension consulting market in the world.

Wells Fargo analyst Elyse Greenspan has reiterated a Buy rating on Aon, and is impressed by the company’s organic growth outlook. In the first quarter of 2021, organic growth was 6% compared to a mere 2% growth in the fourth quarter of 2020.

Greenspan stated, “We are raising our 2021 EPS estimate to $11.50 from $11.25 to reflect AON re-reaching mid-single digit or greater organic over the course of in 2021, as well as the FX  benefit of $0.07 over the next three quarters.”

The analyst has also confirmed an increase of the price target to $287 from $275, implying 12.89% upside potential to current levels.

Consensus among analysts on Wall Street is a Hold based on 2 Buy, 3 Hold, and 1 Sell ratings. The average analyst price target of $259 implies 1.49% upside potential to current levels.

AON scores a 5 out of 10 on TipRanks’ Smart Score rating system, implying it is likely to perform in line with market averages.

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