LONDON  - Aon is wolfing down its humble pie. The $39 billion UK insurance broker sheepishly conceded on Wednesday that it would not bid for peer Willis Towers Watson, ending a public flirtation that lasted less than 24 hours. That’s embarrassing, but not as credibility-sapping as blundering on.

Aon’s hand was forced by antsy shareholders, who sent its share price down 8 percent after Bloomberg reported the company’s interest on March 5, as shares in its $22 billion target jumped over 6 percent. Investors rightly fretted Aon might have to pay a control premium for the smaller Willis Towers Watson that wouldn’t be justified by cost savings from combining the two companies. Happily for Aon boss Greg Case, investors liked his Wednesday U-turn more – Aon shares rebounded 5 percent, while the value of its erstwhile target dropped over 6 percent.

The readiness to execute a quick volte-face is an underrated virtue. Since 2014, 5,320 deals have been withdrawn globally, according to Refinitiv data. CEOs who take ages to give up their M&A dreams tend to end up departing. It’s a lesson that Barrick Gold, currently involved in a slanging match with rival Newmont, could do with learning. The gold miner’s shares are down 7 percent since its $18 billion all-share approach was announced in February, and some investors are trying to shove it towards a joint venture rather than a mega-deal.

The biggest risk, however, is actually doing a bad deal. Axa riled investors in March 2018 by swallowing up Bermuda reinsurer year later, shares in the French insurer are still below where they were in the days leading up to the announcement, despite pledged savings.

Had Aon pressed ahead, it would have rightly been seen as reprising an old rivalry with peer Marsh & McLennan, dating back decades. Last September, MMC bought Jardine Lloyd Thompson for 4.3 billion pounds in cash. Given the limited benefits of Aon tying the knot with Willis Towers Watson, the idea looked an ego trip. Case has done the right thing by turning tail.

CONTEXT NEWS

- Aon said on March 6 it had scrapped plans to pursue a merger with rival insurance brokerage Willis Towers Watson, a day after it revealed it was in the early stages of considering an all-stock offer for the Irish company. Aon did not give any reason for abandoning the deal.

- Shares in Aon were up 5.06 percent at $165.21 by 1517 GMT on March 6, while shares in Willis Towers Watson were down 6.5 percent at $170.17.

(Editing by Peter Thal Larsen and Martin Langfield)

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