Aon Close to Acquiring USI Insurance From KKR in $17 Billion Deal, WSJ Reports

The Wall Street Journal reports that Aon is nearing a $17 billion acquisition of USI Insurance, a brokerage firm backed by private equity giant KKR. According to sources, the deal could be finalized by Monday. Aon, valued at approximately $75 billion, would be purchasing a company that generates $3 billion in annual revenue, with a purchase multiple of about 5.7 times sales.

For KKR, this transaction represents a substantial return on an investment that has significantly appreciated since their acquisition of USI and Canadian pension investor CDPQ from Onex in 2017 for $4.3 billion. KKR has since increased its stake in USI, becoming the firm's largest shareholder. This potential deal aligns with Aon's strategy in the midmarket brokerage segment, as they recently acquired NFP, a middle-market property and casualty insurance broker, for about $13 billion.

However, Aon's previous attempt to merge with Willis Towers Watson in 2021 was thwarted by antitrust objections from the U.S. Department of Justice. RBC Capital Markets has assigned a Sector Perform rating to Aon stock and recently lowered its price target, signaling cautious near-term sentiment despite the company's pursuit of large-scale acquisitions.

KKR's potential exit from the deal fits their recent pattern of capital recycling, following their recent closure of a $23 billion North America-focused private equity fund.