UK investigating Gallagher deal to buy Willis assets

The competition regulator in the United Kingdom announced Tuesday it is investigating the pending acquisition of Willis Towers Watson PLC’s treaty reinsurance business by Arthur J. Gallagher & Co.

In a statement, the U.K.’s Competition and Markets Authority said it is considering whether the acquisition would result in “a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

Gallagher said in a statement that the CMA’s announcement was “a standard part of the process for any significant acquisition.” Willis declined to comment.

When the latest deal was announced in August, Gallagher said it was expected to close in the fourth quarter. Under the agreement, Gallagher said it would acquire the treaty business of Willis Re for an initial payment of $3.25 billion and potentially pay another $750 million subject to third-year revenue targets.

Gallagher in August agreed to buy Willis’ treaty reinsurance business less than a month after a deal for the Rolling Meadows, Illinois-based brokerage to buy a larger part of Willis’ business for $3.57 billion fell apart.

That original deal had been contingent on Aon PLC’s much larger proposed acquisition of Willis, which was terminated in the face of regulatory opposition.

The CMA has invited comments on the latest transaction as part of its initial merger review process (Phase 1) by Oct. 19.

The CMA will announce whether it is referring the planned merger for a Phase 2 investigation by Nov. 29.