LONDON: Aon Plc is seeking to raise about US$13.5bil from a high-grade bond offering to help fund its planned US$17bil acquisition of USI Insurance Services, marking one of the biggest mergers and acquisitions financing deals to come to market in 2026.
The offering’s size could still change depending on demand, according to people familiar with the matter.
Investors indicated interest totalling roughly US$17bil for the sale after calls last Friday, the people said.
The transaction comes even as borrowing costs rose further on Monday, with both credit and equity markets reacting to a call by the leaders of the biggest artificial intelligence firms to slow the technology’s development.
Meanwhile, a surge in oil prices has further fuelled inflation concerns ahead of today’s US Federal Reserve rate decision, worsening the backdrop for markets.
At least five firms weighing high-grade bond sales yesterday have stood down, opting to wait for better market conditions, separate people said.
Aon is marketing notes in seven parts, with maturities ranging from three to 30 years. Initial price discussions for the longest tenor are for a premium of about 1.5 percentage points above Treasuries, a separate person said.
All of the notes except the 30-year tenor would have to be redeemed at 101 US cents on the dollar, plus accrued and unpaid interest, if the USI Insurance acquisition falls through or isn’t completed by Dec 1, 2027.
Bank of America Corp, Citigroup Inc, HSBC Holdings Plc, Morgan Stanley and Wells Fargo & Co are managing the note sale, the person added. Last month, Aon agreed to buy USI Insurance from KKR and other shareholders in an all-cash transaction funded with debt.
The purchase, expected to close by year-end, is intended to expand the firm’s footprint with mid-sized corporate clients.
Aon is one of the world’s largest insurance brokers, while USI Insurance provides insurance brokerage and consulting services to businesses and individuals. — Bloomberg
