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Under the terms of the deal, Aon bought the share capital of Benfield Group for 3.50 British pounds per common share and 2.80 British pounds per preference share, in each case in cash and the assumption of 91 million British pounds of Benfield net debt, representing a total value of around 935 million British pounds on a fully diluted basis.
When the initial report of the acquisition was made on August 22, the total required U.S. dollar consideration was estimated by Aon at $1.75 billion. In order to hedge the acquisition's foreign currency transaction exposure, Aon entered into currency options to purchase British pounds at a fixed exchange rate, enabling it to benefit from the U.S. Dollar's increased strength against the pound.
As of November 25, the required U.S. dollar consideration to close the acquisition was estimated at $1.43 billion. As part of the hedging program, Aon previously expensed $6 million of costs in the third quarter and said it expects to record the remaining $44 million of costs required to complete the hedging program during the fourth quarter.
In connection with the acquisition, Aon announces a global restructuring plan intended to integrate and streamline operations across the combined Aon Benfield organization. The restructuring plan is expected to result in cumulative costs of around $185 million over a three-year period, encompassing workforce reduction, lease consolidation, asset impairment and other costs associated with the restructuring plan.
The restructuring will result in a loss of 500 to 700 positions, predominantly non-client facing roles.
Chicago-based Aon provides risk management services, insurance and reinsurance brokerage, human capital and management consulting services. The company has 36,000 employees worldwide, and operates through more than 500 offices in more than 120 countries.
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