Aon and Willis Tower Watson (WTW) have decided to terminate their $30bn merger agreement and end the litigation with the US Department of Justice.

The merger, which was announced in March 2020, would have formed a company with a combined equity value of approximately $80bn.

Aon CEO Greg Case said: “Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the US Department of Justice.

“The DOJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point.”

Aon will pay a $1bn termination fee to WTW and both organisations will now operate independently.

WTW announced that its board of directors has approved the increase of its share repurchase programme by $1bn, which currently has approximately $500m remaining.

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The broker added that the share repurchase programme has no termination date and may be suspended or discontinued at any time.

Last month, the US Department of Justice (DoJ) filed a civil antitrust lawsuit against the mega-merger.

It argued that the merger would adversely impact the competition in the health and retirement, property & casualty, reinsurance broking, financial risk broking and retirement services market.

Aon and WTW made some divestments to appease the DoJ authorities. However, the complaint alleged that the proposed remedies were inadequate.

In contrast to the US’ DoJ, earlier this month the European Commission approved Aon’s proposed acquisition of WTW.

However, the approval was conditional and followed commitments offered by Aon that include the divestment of certain WTW assets.

In May this year, Aon and WTW agreed to offload Willis Re and certain WTW corporate risk and broking and health and benefits services to Arthur J. Gallagher for $3.57bn.

In the same month, Aon also agreed to sell its German pension business to Lane Clark & Peacock (LCP).