Aon Hewitt Deal will Expand the Consulting Unit

San Francisco (GaeaTimes.com) The world’s largest insurance broker, Aon Corporation is reported to have agreed to buy the human resource company Hewitt Associates in a $4.9 billion deal. Aon will pay $50 per Hewitt Share which is a 41 percent premium of Hewitt’s Friday closing price of $35.40. The $4.9 billion will be paid in cash and stock to expand Aon’s consulting and outsourcing operations creating a new unit.

The deal is the largest in Aon’s history and it is expected that the merger will nearly triple the size of the company’s HR operations. The combined consulting and outsourcing operations will be known as Aon Hewitt. The company will be run by Hewitt’s current CEO Russ Fradin.

After the announcement, Aon’s share was down by 5.8% to $36.10 in the morning trading and Hewitt’s shares jumped by a third to $47.30.

In the recent past, Aon has acquired dozens of firms to expand their insurance and human resource business. They previously acquired reinsurance broker Benfield Group Ltd for $1.4 billion in 2008.

It seems that consolidation is heating up the consulting industry. There are merger chatters of the midsize management consulting firms A.T. Kearney Inc. and Booz & Co. Both companies were interested about a possible tie up but after some talks, Partners at Booz allegedly lost enthusiasm about the deal.

The big fish Deloite is reportedly on the hunt for acquisitions. The specific targets of them are not yet disclosed. Last year, they bought North Government consulting practice of BearingPoint out of a bankruptcy.