JERICHO, N.Y.—Aon Risk Services Inc.'s acquisition of Allied North America will strengthen the Chicago-based brokerage's domestic construction capabilities as it moves to expand its business around the world, executives said.

The deal, announced last week, is expected to close by year-end. While financial terms were not disclosed, one analyst estimated the purchase price at roughly $154 million.

Jericho, N.Y.-based Allied North America, which specializes in construction and surety business, is the 27th-largest broker of U.S. business, based on $88.1 million in 2008 U.S. brokerage revenues, according to Business Insurance's ranking. It has roughly 450 employees in 16 offices throughout the United States.

Upon completion of the deal, Allied Chairman Bill Marino will assume the role of president of Aon's global construction business and vice chairman of Aon Construction Services Group based in New York, Aon said.

“From our perspective, this was the best acquisition in (the construction) sector that we could have found,” said Peter Arkley, Los Angeles-based chairman and chief executive officer of Aon's global construction business and Aon Construction Services Group.

Allied not only has “a tremendous depth of talent” and “strong leadership,” but it also shares the same global expansion mission as Aon, Mr. Arkley said.

He noted, however, that in order for the brokerage unit to expand globally, it needed to have the “right kind of depth in the United States to grow and protect our core business.”

With Allied, “essentially what we've built is the largest domestic brokerage firm for construction with a lot of talent and 30 offices coast to coast,” Mr. Arkley said. “And Bill (Marino) and I are going to take responsibility for driving the global strategy for Aon for expansion around the world.”

Analysts like the deal.

“The addition of Allied North America will not fundamentally change operations for Aon, however, we view the bolt-on acquisition as another positive example of management's strategy to opportunistically add strength,” Keith F. Walsh, an analyst with Citi Investment Research in New York, wrote in a client note.

Mr. Walsh estimated that Aon paid approximately $154 million in cash for Allied.

Meyer Shields, an analyst with Stifel, Nicolaus & Co. Inc. in Baltimore, said he also likes the deal.

“We think bigger buyers are attractive to sellers currently struggling for growth because more extensive internal resources and stronger insurer relationships can help selling brokers to get their clients better prices, terms and conditions than they could as smaller independent brokers,” Mr. Shields wrote in a client brief.

Additionally, Aon had nearly $1.2 billion in cash at the end of September earning “painfully low returns,” so “the opportunity cost of acquisitions, in terms of foregone investment income, is minimal,” Mr. Shields wrote.