Aon and Willis Towers Watson have agreed to sell the Willis Re reinsurance business and certain UK, European and North American operations to Arthur J. Gallagher for $US3.57 billion ($4.6 billion) to secure European regulatory approval for their merger.

The sale of businesses is contingent on completion of the deal, which the companies now say they are working to conclude “as soon as possible during the third quarter” after previously aiming for the first half.

Aon says the agreement resolves questions raised by the European Commission, and by regulators “in certain other jurisdictions”, while the companies are still working toward gaining approvals in other regions, including the US, where an independent review is underway.

Arthur J. Gallagher Chairman, President and CEO Patrick Gallagher says more than 6000 people will join the company as a result of the agreement.

“This acquisition will accelerate our long-term strategy by significantly expanding our global value proposition in reinsurance, broadening our retail brokerage footprint and strengthening key niches and specialty brokerage offerings,” he said.

“The powerful combination of expertise, geographic reach and scale that this acquisition presents will greatly enhance our offerings to clients and prospects, while also providing significant value for our colleagues, carrier partners and shareholders.”

Gallagher says the combined operations to be acquired generated an estimated $US1.3 billion ($1.7 billion) of pro-forma revenue last year.

The reinsurance brokerage operations, which include both treaty and facultative arrangements, generated about $US750 million ($970.7 million) in revenue, with the business representing more than 750 insurance and reinsurance company clients, across more than 25 countries, and placing more than $US11.5 billion ($14.9 billion) of premium annually.

The UK and European brokerage operations generated approximately $US500 million ($647 million) of revenue and include certain operations in Germany, Netherlands, Spain and France as well as specialty operations in the UK principally involving cyber, space and aerospace products.

The North American assets relate to predominantly middle-market and large-account clients located in select markets such as San Francisco, Houston and Bermuda, across niches such as construction and energy.

Aon says it remains committed to $US800 million ($1.04 billion) of cost synergies from the merger, with the combination to still create significant shareholder value. The deal with Gallagher demonstrates strong momentum on the path to closing the transaction, it says.

Aon and Willis Towers Watson are progressing their integration planning, following the recent naming of a future leadership team.

“We announced this combination knowing that the complementary capabilities of our two firms would allow us to deliver more value to clients and opportunities for colleagues,” Willis Towers Watson CEO John Haley said.

“The events of the last year have only reinforced that rationale, and this announcement is an important step toward realising that potential.”

Australian-based spokespeople for Aon, Willis Towers Watson and Gallagher say there are currently no further local details to add to the international announcements.