Aon plc AON moved to lock in financing for its $17 billion cash acquisition of USI Insurance Services, launching a seven-tranche U.S. dollar bond offering, according to Bloomberg. The company is set to raise $13.5 billion through investment-grade notes with maturities stretching from three to 30 years. The financing package could also include a $4 billion term loan.
Aon agreed in August to buy USI from KKR & Co. Inc. KKR and other shareholders, with closing expected by year-end in 2026. Most of the acquisition-related bonds must be redeemed at 101% of principal if the USI deal is terminated or is not completed by June 1, 2027, although the deadline can be extended by up to six months for outstanding regulatory approvals.
Investor demand made the bond sale notable. Orders reached roughly $65 billion, almost five times the $13.5 billion Aon plans to issue, despite a difficult market backdrop and higher borrowing costs. Strong demand allowed pricing to improve: the spread on the 30-year tranche tightened by 35 basis points from initial discussions to 115 basis points over U.S. Treasuries, per reports.
The offering would be 2026’s second-largest investment-grade bond deal tied to an acquisition, behind Abbott Laboratories’ $20 billion February transaction. That response suggests investors remain willing to finance large, high-quality corporate acquisitions even when broader credit conditions are less favorable.
The USI acquisition significantly expands Aon’s presence in the U.S. middle market, but the debt-funded transaction will push leverage higher in the near term. Fitch placed Aon’s debt on Rating Watch Negative and expects debt to remain roughly four times a measure of earnings through the end of 2027, per reports.
USI brings about $3 billion in annual revenues and gives Aon greater scale among midsized U.S. clients. Aon expects the deal to be dilutive to adjusted EPS in 2027 before becoming accretive from 2028. Near-term capital allocation will likely favor debt repayment over share repurchases after the transaction closes.
Price Performance
AON shares have declined 12.5% year to date compared with the 8.4% fall of the industry.
Zacks Rank & Key Picks
AON currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Finance space are CNO Financial Group, Inc. CNO and Assurant, Inc. AIZ, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus mark for CNO Financial’s current-year earnings is pegged at $4.74 per share, which indicates 16.2% year-over-year growth. It has witnessed two upward estimate revisions against none in the opposite direction in the past 60 days. CNO beat earnings estimates in each of the last four quarters, with an average surprise of 23.2%.
The Zacks Consensus Estimate for Assurant’s current-year earnings is pegged at $22.07 per share, which indicates 11.6% year-over-year growth. It has witnessed two upward estimate revisions against none in the opposite direction in the past month. AIZ beat earnings estimates in each of the last four quarters, with an average surprise of 17.7%.
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