- Filing of certain prospectuses and communications in connection with business combination transactions (425)
August 12 2010 - 8:59AM
Edgar (US Regulatory)
Filed by Aon
Corporation
Pursuant to Rule 425 under the Securities Act of
1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Hewitt Associates, Inc.
Commission File No.: 001-31351
Commission File No. for Registration Statement
on Form S-4: 333-168320
This document was distributed by Aon Corporation to its Aon
Global colleagues and by Hewitt Associates, Inc. to its associates
beginning on August 12, 2010.
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Associate Questions and Answers
General
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Q.
A.
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Aon: How does the merger affect Aons strategy for Aon
United?
The opportunities to unite our
firm as a result of this merger are enormous. This merger will strengthen our
ability to bring solutions from any part of our business to all other parts
of our business. It will make our human resource consulting and outsourcing
business more attractive to our ARS and Aon Benfield colleagues for
cross-selling purposes. For example, we will be able to leverage Hewitt
industry-leading benefits administration, HRO and consulting capabilities to
our ARS clients, as well as their large client base, to drive increased
revenues for ARS.
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Q.
A.
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Why are Aon Corporation and Hewitt Associates merging?
The
Aon/Hewitt merger provides an opportunity to deliver even more value to
stockholders, clients, and associates. Well have a strong global
organization and offer an even broader spectrum of consulting and outsourcing
services to our clients looking to address an increasingly complex set of
challenges. With $4.3B in annual revenues, the combined Aon Hewitt will be
the leader in our industry, and part of a larger $10.7B business. Each of our
organizations brings a variety of both unique and complementary solutions and
capabilities that, combined, will bring more resources, more talent, more
investment, and broader global reach to our clients. The combination will
create new and broader career development opportunities for many associates
in both organizations.
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Q.
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Will Aons or Hewitts leadership team remain in place?
The
success of both of our companies has been largely due to our people. We
expect that the new Aon Hewitt management team will be composed of leaders
from both organizations.
We
dont have the specifics on that today, but we are fully committed to working
through a thoughtful and efficient process to name the leadership team.
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Q.
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Will Hewitt keep its brand name?
Preserving
the Hewitt name and reputation is a priority for both companies. After
receiving all regulatory and stockholder approvals, and after closing the
transaction, the new business segment will be named Aon Hewitt.
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Q.
A.
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Aon and Hewitt offer different service lines. Do we plan to
shut down any lines of business?
Aon
is excited about the products and services Hewitt offers and vice versa.
Together, we have big plans for growth. There are no plans to shut down any
business lines at this time. We are putting these companies together to bring
the best of our collective solutions to our clients. The companies are highly
complementary with little overlap, which is the beauty of this combination.
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Q.
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When will the transaction close?
We
expect to close the transaction in November. We need to file a joint proxy
statement/prospectus and we must receive approvals from regulators and
stockholders before the merger can be completed.
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Q.
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What are the
implications to Aons stock price?
We should not focus on the
stock price as it will go up and down over time. Our focus should be on
delivering distinctive value for clients. If we accomplish this, our clients,
our associates, and our stockholders will be rewarded over the long term.
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Q.
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Aon: How does
this transaction affect future investments / acquisitions?
The
merger will strengthen Aons client-serving capabilities around the globe,
while generating strong cash flow for continued investment in long-term
growth opportunities.
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Q.
A.
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Ive seen a number of articles about
lawsuits against Hewitt. What are these all about?
While we dont comment on pending litigation, these
types of lawsuits are not unexpected in response to a transaction of this
size. We are confident that the Board acted appropriately and in the best
interests of Hewitts stockholders.
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Q.
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What should we tell suppliers?
At this time our message to suppliers is that we are
operating business as usual. If you need to escalate, contact Mark Power
for Hewitt (
847.442.2908)
or Lewis Love for Aon (
1-312-381-3094)
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Q.
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What if I am asked to comment on the merger by a member of
the media or analyst community?
Neither Aon colleagues nor Hewitt associates s
hould, under
any circumstances, make comments to any members of the media or
industry/financial analysts.
Hewitt
associates:
·
Please direct
any U.S. media inquiries to Maurissa Kanter, Public Relations, at
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847-442-0952,
and European media inquiries to Colin Mayes, at +44 0 1372 733 689.
·
All financial
or investor inquiries should be directed to Sean McHugh, Investor
Relations, at 847-442-4176.
Aon
colleagues:
·
Please direct all
media inquiries to David Prosperi, Public Relations,
at 312-381-2485.
·
All financial or investor inquiries should be directed
to Scott Malchow, Investor Relations, at 312-381-3983.
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NEW
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Q.
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Im confused about the relationship between Aon
Corporation, Aon Hewitt, and Aon Consulting. Can you clarify?
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A.
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Aon
Corporation is organized into two global business segmentsone focused on
risk and the other focused on people. The risk business focuses on insurance
brokerage and includes Aon Risk Services, which is their retail brokerage
arm, and Aon Benfield, their reinsurance arm. The people, or human capital,
segment is Aon Consulting, which includes both their consulting and
outsourcing practices.
Hewitt
will be acquired by Aon Corporation at the close of the deal, but Hewitts
operations will be merged with those of Aon Consulting to form Aon Hewitt.
Together we will become the new human capital segment and Russ will serve as
the segment chairman and CEO.
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NEW
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Q.
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Will Hewitt move to a calendar-based fiscal year?
Yes.
Aon uses a January December calendar year, and Hewitt will
migrate to that after the transaction closes. Hewitt will adjust the FY11
planning to account for the difference between the close date and the
beginning of Aons fiscal year.
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NEW
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Q.
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Why
do we have to have the safe harbor and additional information on all of
our internal and external communications related to the merger?
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A.
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The safe harbor and additional information
language is a requirement under the federal securities laws. Since both Aon
and Hewitt are public companies, we have to include the language to provide
the appropriate guidance about our communications for our stockholdersboth
inside and outside the company.
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NEW
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Q.
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Hewitt: How does the proposed merger affect the FY11
budgeting process?
We
will move forward with the budgeting process according to our normal
schedule, but will develop our plans for a 15-month period to synch up with
Aons fiscal year. At the close of the transaction, our finance teams will
integrate the plans of any parts of the business that will be managed
jointly.
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NEW
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Q.
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Hewitt: How will we maintain the Hewitt standard of quality
during and after the transition?
Hewitt
has built its reputation on the standard of quality we deliver for our
clients day in and day out. Our commitment to high-quality service delivery
does not change with this merger. We will continue to use the management
practices, processes, and quality assurance protocols we have in place today
to ensure service delivery excellence for our clients. It is critical that
our client teams stay focused on our clients needs and avoid becoming
distracted by the integration activities. Our commitment is to keep our
clients current on the latest developments to minimize
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uncertainty.
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NEW
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Q.
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Hewitt: Will we continue to move forward with the new
Finance ERP platform?
Yes.
We will postpone the planned roll-out a few months, but will continue to move
forward with the launch of our new global Finance ERP. We are currently
targeting a go-live no earlier than January 1, 2011. Aon is on an older
version of PeopleSoft, but we have not yet made any decisions about how we
might integrate or convert platforms. Stay tuned for more information on any
timing changes.
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NEW
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Q.
A.
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Hewitt: I have an open requisition for a position on my
team. Can we continue the hiring process?
Talk
to your aligned recruiter for guidance on the status of any requisitions.
Business leaders are reviewing all open requisitions against client
commitments and we will continue to hire key skills that are time-sensitive.
Open requisitions for various corporate functions and non-critical positions
are being cancelled or put on hold.
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About Hewitt
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Q.
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Who is Hewitt? What do they do?
Hewitt
is one of the worlds leading HR consulting and outsourcing companies. Today,
more than 23,000 employees are serving clients in more than 30 countries with
a clear focus on delivering excellent customer service and measurable
business results. Hewitt helps more than 3,000 clients around the world
anticipate and solve their most complex benefits, talent, and related
financial challenges. Its client list is a mix of complex global
organizations, growing mid-sized businesses, and companies somewhere in
between. Hewitt serves nearly two-thirds of the FORTUNE 500, and 95% of its
largest clients have been partnered with the companyu for more than five
years. This breadth and depth of experience is unmatched in the industry. As
the leading expert in the field, Hewitt is helping to shape the debate on
some of the toughest people issues in areas like healthcare reform,
retirement reform, and executive compensation practices. Hewitt has some of
the most reliable data in the industry on the topics, and also has some of
the best thought leaders making sense of the trends and helping to design
whats next.
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Q.
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Is Hewitt a
publicly traded company?
Yes. Hewitt went public on
June 27, 2002. Their stock trades on the NYSE under the stock symbol
HEW. You can visit www.hewittassociates.com to learn more about this great
company.
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Q.
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What is
Hewitts mission statement?
Hewitt mission is making the
world a better place to work. It has four pillars of shared purpose that
guide its decisions and actions:
·
Keep clients first
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Create a rewarding work experience
·
Grow with intention
·
Get lean
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Q.
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What are the
market factors that drive Hewitts growth?
Hewitt commonly refers to three
market factors that drive its growth:
·
Pressure on clients to reduce costs
·
Need for clients to improve flexibility and focus
on their core business
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Challenge of managing compliance risks and
satisfying changing regulations
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Q.
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How are Hewitt services similar or
different to Aon? What is the difference between Hewitt Benefits Admin and HR
BPO business?
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A.
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Hewitt offers services in 3 areas consulting,
benefits outsourcing and HR Business Process Outsourcing. In consulting, the
offering is primarily based around healthcare, retirement and financial
management, talent, and communication consulting services. Both Aon and Hewitt
have solid offerings in this space with over $1.3 billion and $1.0 billion in
revenues respectively. Aon is strong with mid market (<2,500 employees)
clients and Hewitt has a strong large market client base.
Benefits Outsourcing includes defined benefits
administration, defined contribution administration and health and welfare
administration. Hewitt has a strong presence in this area with $1.5 billion
in revenues. Aon has a specialized practice with over $200 million in
revenues.
HR BPO (Business Process Outsourcing) is defined as
outsourcing services that include HR functions such as benefits, payroll,
workforce administration, and other HR services. Hewitt is the market leader
in this space with $480 million in revenues. Aon does not have an offering in
this area.
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Q.
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Does Hewitt have a global presence?
Yes, Hewitt operates in more than 30 countries with 110
offices across the globe. However, about 75% of its revenues come from within
the U.S.
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About Aon
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Q.
A.
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Who is Aon? What do they do?
Aon
is the leading global provider of risk management, insurance and reinsurance
brokerage services and has a growing presence in human capital consulting and
outsourcing. Its 36,000 associates generate $7.7B in revenue working from 500
offices in 120 countries. While some may know Aon primarily as an insurance
broker, under the direction of the President and CEO, Greg Case, the company
has been reshaping its business over the past five years to focus on two
global business lines: Risk and Human Capital. The company restructured its
portfoliodivesting the insurance underwriting businesses, implementing a
lean initiative to simplify the cost structure and completing a number of
strategic acquisitions. In its Human Capital business, Aon is driving growth
through several key initiatives: strengthening its Health and Welfare
business, building its investment consulting capabilities, increasing its
presence in emerging economies, and rolling out new tools and messages to
better promote their full portfolio of solutions. Longer term, Aon sees
opportunities to offer brokerage solutions to Hewitt clients and believes
existing Aon brokerage clients will be receptive to many Hewitt solutions as
well.
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Q.
A.
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Is
Aon a publicly traded company?
Yes.
Aon went public in 1987 as Aon, a Gaelic word meaning Oneness. The
company is listed on the New York Stock Exchange as AON.
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Q.
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Where
are they located?
Aon
is headquartered in Chicago, Illinois, and has more than 500 offices in
120 countries.
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Q.
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What were their revenues in 2009?
Aon
reported revenues of more than $7.7 billion in 2009.
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Q.
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When is Aons fiscal year?
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A.
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Aons
fiscal year coincides with the calendar year. Its next fiscal year will begin
on January 1, 2011.
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Q.
A.
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Who leads Aon?
Aon
is run by President and Chief Executive Officer, Greg Case. Greg Case has
nearly two decades of experience in the insurance and financial services
industries.
Before
joining Aon, he served on the governing Shareholders Committee at
McKinsey & Company, and led their Global Insurance and Financial
Services Practice. Prior to McKinsey, he worked for the investment banking
firm of Piper, Jaffray and Hopwood and at the Federal Reserve Bank. He also
currently serves as a Director of Discover Financial Services.
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NEW
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Q.
A.
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What does Aon do in their risk business?
·
Aons largest
business,
Aon Risk Services,
works with
clients who need advice and solutions on a wide variety of risks ranging
from property and casualty to natural catastrophes to employee injuries to
terrorist strikes. Insurance companies often require their own insurance for
the risks they face or choose to syndicate some of the risk they assume
this is called reinsurance.
Aon Benfield
,
another Aon subsidiary, is a reinsurance specialist and the largest insurance
broker in the world.
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About Me
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My Job
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Q.
A.
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How will this affect my job?
There
are no immediate changes. We are continuing to serve our clients today just
like we did yesterday.
Its
important to remember that the focus of this acquisition is on accelerating
top-line growth. The retention and engagement of our entire team is critical
to delivering on our client commitments, transitioning well and setting
ourselves up for ongoing success. Ultimately, this will create new and
broader career development opportunities for many associates.
We
understand that combining two organizations always creates uncertainty. While
we dont have the answers today, we have already started to map our
capabilities and resources. We are fully committed to working through a
structured and rapid process to name the new leadership team and our
go-to-market plan by practice and geography.
As
you would expect with a combination of this size, we will have a plan to
eliminate redundant costs from both organizations. These efforts will be
focused in areas where there is overlap or further economies to be realized,
such as real estate, supplier savings, technology, corporate services functions,
and the significant costs of running a public company. We have formed a joint
team responsible for the transition planning. It is inevitable that there
will be some job loss, but we will handle these situations with fairness and
respect for those associates.
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Q.
A.
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What should I do differently now?
Nothing.
You should keep doing what you are doing. Your number one priority should be
to deliver excellent client service and continue with our efforts to improve
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the
business and sell new work.
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NEW
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Q.
A.
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How should I handle any calls I get from competitors or
headhunters?
Hang
up right away! In all seriousness, we do expect that the frequency of calls
from competitors or headhunters will increase during the transition as these
groups try to use the normal uncertainty created by a merger to their
advantage. These types of calls are a testament to the great people we have
at both organizations. There will be many opportunities at Aon Hewitt that will
become more clear once we can begin working as one company. How you respond
to personal solicitations is your decision.
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NEW
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Q.
A.
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Will there be new job opportunities as a result of the
merger?
Yes,
we expect there will be new job opportunities for some individuals as we
integrate our organization. These will become clearer once we can begin
working as one company.
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My Pay and
Benefits
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Q.
A.
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Will my pay and benefits change?
We
do not expect any near-term changes to Aon or Hewitt benefits or compensation
during the transition period. After the deal closes, we will share more about
any changes to benefits.
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Q.
A.
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Will my pay change?
Your
pay will remain the same during the transition period.
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Q.
A.
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Hewitt: What will happen to my FY10 annual bonus?
We
expect that the transaction will close after Hewitts fiscal year and bonus
measurement period has ended (September 30, 2010). Therefore, all
current performance and bonus plans will remain in effect and performance
against defined metrics and goals will be used to determine payouts for the
current fiscal year. Aon is committed to providing a competitive compensation
and benefits package for its associates.
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NEW
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Q.
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Hewitt: Since we postponed the annual engagement survey,
what will we use for that measure in some bonus plans?
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A.
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The
annual engagement survey was scheduled to run during the period of the merger
announcement. While the survey was already launched in India and Europe, we
made the decision to stop the process in other geographies because we knew
the results would be impacted by the announcement. We are considering
completing the survey with some additional questions as input to the
integration work. We will confirm our approach on the bonus measure (for
those for which it applies) shortly.
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NEW
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Q.
A.
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Hewitt: Will we move to Aons benefit programs?
Hewitt
associates will move to a new benefits program over time. We are determining
the timing of the changeover and will share more when we can.
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Equity
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Q.
A.
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How does the transaction work?
Aon
has offered $50 per share of Hewitt stock. Both Hewitt and Aon shareholders
must approve the deal. We expect this to occur sometime in November.
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Q.
A.
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Hewitt: What will happen to my unvested Restricted Stock
Units (RSUs)?
On
the effective date the deal closes (anticipated sometime in November), all
RSUs
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will
become fully vested shares of Hewitt common stock. These Hewitt common shares
will then be paid out in a mix of cash and Aon stock. For each Hewitt share,
you will receive consideration equal to $25.61 cash plus 0.6362 shares of Aon
stock for each Hewitt share. The final value of your equity will fluctuate
with the value of Aon stock. The vesting of RSUs is a taxable event. As is
the process for RSU vesting that has occurred in the past, a portion of the
shares that vest will be withheld to cover the tax liability in the US and
many countries. (Tax impact and withholding will vary based on the country in
which you are located). We are working with Aon along with Morgan Stanley
Smith Barney to further define the process for converting Hewitt RSUs,
including the timing thereof. More details will be communicated in the coming
weeks.
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Q.
A.
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Hewitt: What will happen with my vested restricted stock
units?
Between now and closing, as a Hewitt shareholder, you
will have the opportunity
to choose one of three considerations:
1. Mix of $25.61 cash plus 0.6362 shares of Aon stock
for each Hewitt share
2. The same value paid in 100% cash
3. The same value paid in 100% Aon stock
Shareholders
that elect to receive 100% stock or 100% cash may be subject to a pro rata
adjustment under certain circumstances that will affect the mix of
consideration they receive but not the value. More details concerning the
election process will be provided in the coming weeks.
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Q.
A.
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Hewitt: What will happen to my stock options?
On
the effective date the deal closes, all unvested stock options will become
fully vested and exercisable. If you are a stock option holder, 100% of your
outstanding Hewitt stock options must be converted to options to purchase Aon
stock. The number of Aon options and their strike price will be adjusted in
order to maintain the option spread immediately before and after the closing
of the merger. In other words, if your Hewitt options have a $25,000
in-the-money value before the closing, they will have the same $25,000
in-the-money value after the closing. The accelerated vesting and
conversion to Aon options are not taxable events. We are working with Aon
along with Morgan Stanley Smith Barney to further define the process for
converting Hewitt stock options, including the timing thereof. More details
will be communicated in the coming weeks.
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Q.
A.
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Hewitt: What will happen to the cash LTI program?
The
Cash LTI awards will become fully vested on the effective date the deal
closes. Like RSUs, Cash LTI awards will be taxable. The administration of
this process will be further defined with our plan record keeper and more details
will follow in the coming weeks.
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Q.
A.
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Hewitt: Can I sell my stock between the announcement and
the close?
As
a general matter, the pending transaction, once announced, will not affect
your ability to sell your stock. You will, however, continue to be subject to
Hewitts general policies concerning stock sales, including blackout policies
and general restrictions on sales, when you are in possession of material
undisclosed information.
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NEW
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Q.
A.
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Hewitt: Am I guaranteed to receive
$50/share upon the deal closing?
No. You will receive a value equal to $25.61 +
0.6362 shares of Aon stock for each Hewitt share. The actual
value
per share at the time the
transaction closes will be based on the current Aon stock price. To calculate
the value of the .6362 Aon share on the acquisition closing date, multiply
that fractional value by the Aon stock price on the acquisition closing date.
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HR Policies
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NEW
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Q.
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Hewitt: Does Aon allow virtual work arrangements? Will I be
able to keep my Alternative Work Pattern (AWP)?
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A.
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Yes,
Aon does allow virtual working and a variety of alternative work arrangements
where it makes sense for the business. We will review and harmonize these
policies as part of the transition and communicate any changes if necessary.
As a reminder, all AWPs are subject to regular review and this will not
change.
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Transition
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Q.
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Will Aon and Hewitt be able to sign deals and make
commitments in the interim period?
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A.
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Both
Aon and Hewitt are stand-alone companies until the deal closes. Greg/Russ and
their respective executive teams continue to have the authority to commit the
organizations, subject to the terms of the merger agreement. Aon will honor
all commitments Hewitt has made and will make. There is no change in process
or delegation of authority until the deal closes, at which time we will
communicate the new governance.
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Q.
A.
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Should I be doing anything differently now that we will be
part of a different organization?
No. Aon
and Hewitt must continue to operate independently until the deal closes,
which is expected to occur in November. Your top priority should remain to
deliver excellent service to our clients. We are still operating according to
our fiscal year plan.
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Q.
A.
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How will we integrate the two organizations?
Following
the close of the transaction, we intend to combine our business with Aons
existing operations and run the business globally under the Aon Hewitt brand.
We dont have further specifics now, but we are establishing an integration
planning process made up of members of both organizations that will begin
working on how we can best use each others strengths and bring our two
companies together. Given the complementary nature of our companies and the
talented teams at Aon and Hewitt, we anticipate a smooth integration of our
two companies.
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Q.
A.
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What happens next?
During
this period between signing and closing, we have appointed a transition team
led by Greg Besio (chief administration officer, Aon), Baljit Dail (co-chief
executive officer of Aon Consulting and chief operating officer of Aon
Benfield), Eric Fiedler (co-president of Hewitt consulting), Kathryn Hayley (co-chief
executive officer, Aon Consulting), Kristi Savacool (senior vice president,
Hewitt benefits outsourcing), Jim Konieczny (president, Hewitt HR Business
Process Outsourcing), Yvan Legris (co-president of Hewitt consulting), Eric
Koenig (senior vice president and head of Aon corporate strategy), and Matt
Levin (senior vice president of Hewitts corporate development and strategy).
This team will begin to work through the many decisions we need to make to
smoothly integrate the business on all levels: for example, people, culture,
technology, solutions, real estate, sales & account management,
marketing, finance, etc.
We
know this is a big change and a lot to absorb. Nothing is happening
immediately, so you will have some time to learn more and understand how this
will affect you and your team. In the meantime, our clients are still
counting on us to deliver the same great work, and it is critical that we
exceed their expectations.
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NEW
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Q.
A.
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How were the leaders on the integration team determined?
How will businesses/practices be represented if the aligned business/practice
leader isnt on the team?
Russ
and Greg Case selected a subset of senior leaders to represent both Aon and
Hewitt on the integration steering committee. Between Kristi Savacool, Jim
Konieczny, and Yvan Legris, Hewitt has leadership from its three primary
business segments-Benefits, HR BPO, and Consulting. This transition steering
committee is led by Aons Greg Besio, and will oversee all integration
decisions and will represent all businesses and practices within Hewitt. Russ
has named Matt Levin to serve as Hewitts overall Integration Leader working
alongside Eric Koenig from Aon to lead the various workstreams for integrating
the two businesses. As we confirm workstreams and form working groups, more
leaders and associates will be asked to participate. Well share more about
the process.
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NEW
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Q.
A.
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How will we make sure its a true integration of the two
companies?
The
steering committee is establishing a set of guiding principles to ensure the
team makes decisions that represent the best of our two organizations. Both
sides recognize that Hewitt and Aon Consulting are both people-based
businesses and our first guiding principle is that we are all committed to a
fair and transparent process that treats all associates and colleagues with
care and respect. The integration team and working groups will be staffed
with representatives from both organizations to foster an open and complete
dialogue.
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NEW
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Q.
A.
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Can I volunteer to work on the integration?
We
understand that many associates would like to participate in the integration
and we will definitely need help. Were still identifying the various
workstream leaders and will then build out the workstream teams based on the
skills and knowledge we need. Above all, everyone can help during the
transition by staying focused on our serving our clients and keeping the
business running smoothly.
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The
Deal
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NEW
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Q.
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Hewitt: Can you share more about how we determined that
$50/share was a good price for our company?
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A.
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The
$50/share purchase price represents a 41% premium over Hewitts stock price
at the time of the announcement. Our executive team and our board of directors
considered our strategic plans for the business, the competitive environment,
the forecasts of our likely results and the risks of obtaining our goals.
After much analysis and discussion, they felt strongly that the merger
provided a more attractive return for our stockholders on a risk-adjusted
basis and provided the business with the greatest opportunity for continued
success in light of the changes in the competitive landscape. The response
from the vast majority of our largest shareholders has been very positive.
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NEW
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Q.
A.
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Hewitt: What do associates get out of this deal if they
dont have stock?
Our
senior leadership and our board of directors believe that this merger
provides the greatest opportunity for the continued growth and success of our
business. This translates into more jobs, more career opportunities and more
rewards for all associates who are part of the Aon Hewitt organization.
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10
NEW
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Q.
A.
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Ive seen this called both a merger and an acquisition.
Which is it?
These
terms are often used interchangeably. Aon will acquire Hewitt. But, when the
transaction closes, Hewitt will combine with Aons Consulting business to
form Aon Hewitt. Even though one organization is buying the other, the purchase
is in the form of a merger. After the merger, we will maintain a lot of the
aspects of the acquired Hewitt business (i.e., the Hewitt brand, the basic
outsourcing business model, etc.).
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NEW
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Q.
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Hewitt: Are we still focused on growth? Or was this merger
about taking costs out of our business?
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A.
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This
union will allow us to accelerate top-line growth while continuing our
quality and lean initiatives to ensure the growth is profitable. Both Aon and
Hewitt are focused on growth, and bringing the two organizations together
expands our client base, providing new opportunities to sell our respective
services and much greater distribution, particularly in the mid-market and
internationally. There will be cost-saving opportunities from eliminating the
duplicate corporate overhead and streamlining areas of overlap such as real
estate, technology and suppliers. But, to be clear, we would not have done
this deal had we not thought that the two businesses combined could grow at
more accelerated rates than they would apart. While we need to take out
redundant cost, the long-term strategy is all about growth.
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Clients
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Q.
A.
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How are we telling our clients?
Executive
Sponsors, Account Executives, Sales Executives, Lead Consultants, and all
other client-facing colleagues were briefed on the news and have contacted
clients immediately. In addition, Russ sent an e-mail to thousands of Hewitt
client contacts when the press release was issued, as did Greg for Aon
clients. We have a complex and robust client outreach plan that will continue
throughout the integration.
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Q.
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Hewitt: Im not an Account Executive, but I talk to my
client contact every day. What should I say to him/her?
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A.
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Talk
to your Account Executive or, if there is no Account Executive, to the lead
consultant first. It may make sense for you to inform your client contact,
but the Account Executive (or lead consultant) has the lead in determining
the appropriate outreach.
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Q.
A.
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What if my client contact asks me about the news? What should
I say?
Since
this news is very new to you as well, use a response like the following:
I
am learning about this at the same time that you are, but we are excited
about the potential for the Hewitt/Aon combination and the opportunities it
brings for our clients. What I can tell you is that you will not experience
any change in service as a result of this announcement. You will continue to
have the same team delivering for you today that you did last week. We will
continue to keep you informed of any developments, but until that time, it is
business as usual.
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Q.
A.
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Whats in this for Hewitt clients? Whats in this for Aons
clients?
Were
looking at this in terms of how we ensure we can meet clients needs for the
long term. Aon offers Hewitt access to capital, scale, global markets, and
relationships that enhance our ability to serve clients in the future. Hewitt
will now have more resources to deploy to serve clients very well and extend
its leadership as the preeminent HR services firm.
Similarly,
t
he Hewitt business is
renowned in the industry for its commitment to
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11
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excellent client service,
creating a rewarding experience for its associates, and for operational
excellence, which are the same values as Aons.
As part of Aon, Hewitt can
continue to build upon on these strengths and create an unparalleled
consulting and outsourcing franchise with global reach, diverse product and
solutions capability and world-class colleagues to effectively serve the
ever-evolving needs of clients.
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Q.
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My client does business with both Aon and Hewitt. Does this
announcement change the way we should work with them?
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A.
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No. Until
the transaction is closed, Aon and Hewitt will continue to operate as two
separate businesses and compete vigorously against each other. Clients will
be serviced in the same manner as in the past, with no changes to client
teams. For consulting, clients should continue to choose their consultant
based on the value they believe is offered by Aon or Hewitt in any RFP
process. The two businesses will not conduct business together or share
client information until the closing is completed. After the transaction is
closed, we intend to maintain client team structures but integrate the
distinctive benefits that Aon and Hewitt deliver to clients.
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Q.
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Who should clients call for service issues?
Until the transaction is
closed, clients should continue to follow their current processes to request
service from Aon or Hewitt. After the closing is completed, we intend to
present consistent and integrated service to all of our clients. More details
about post-closing service will be available to clients as we progress through
the closing of the merger.
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NEW
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Q.
A.
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What feedback have we heard from clients about the merger?
In
general, our clients have been supportive of our merger plans. Not
surprisingly, their primary concern has been any distraction this may cause
for associates, but weve continued to assure them that each of us is 100%
focused on delivering excellent service for them, and that we dont expect
changes to their teams. Our clients come first and will be particularly
sensitive during the integration process. We absolutely cannot be distracted
from delivering world-class service to them as we do today.
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NEW
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Q.
A.
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Hewitt: Should we continue to sell against Aon until the
transaction closes?
Yes.
Until the transaction closes in November we will continue to operate as
separate companies and will compete vigorously against each other for new
opportunities. If you have any questions about this, please address them to
Steven Kyono or Matthew Levin.
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NEW
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Q.
A.
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Hewitt: What will happen to competitors of Aon who are our
clients? Will they leave?
In
general, our clients have been supportive of our merger plans. We have
contacted each of our clients to inform them about the merger personally and
to understand any specific concerns. While not always made public, we do
provide certain services for some of our own competitors now and we expect
this to continue based on the strength of our solutions. We will, of course,
manage each client situation very carefully throughout the transition.
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NEW
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Q.
A.
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Hewitt: Do we have to sign new contracts with our existing
clients as we merge with Aon?
Few
of our contracts have change in control provisions that would allow a client
to exit based on a change in ownership. For those who do, we are working
closely with
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12
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our
contacts to gain the necessary consents during the transition period.
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The
Business
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Benefits
Outsourcing
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Q.
A.
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How big is Aons Benefits Outsourcing business?
Aon
serves 1,025 clients and administers benefits for 3.5 million participants.
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Q.
A.
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What markets does Aon serve for Benefits Outsourcing?
Aon
focuses primarily on what we would call the middle market, usually targeting
companies with an average employee base of 5,000 employees. Aon does not have
an offer that competes with Hewitts Large Market offer.
Aon
has Benefits Outsourcing operations in both North America and Europe.
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Q.
A.
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Will Hewitt migrate any of our clients to Aons platforms?
Or vice versa?
We
do not have any plans to convert clients to other platforms. Hewitts TBA
platform is one-of-a-kind in the industry, and provides the scale and
flexibility Aon was seeking to expand the offer. In the middle market,
Hewitts CBA, DBCalc, FS5, and Enterprise platforms are proven and resonating
well in the market. In Europe, Hewitt already is underway with some
conversions to aquila. This is the same platform Aon already uses.
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NEW
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Q.
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What was appealing to Aon about our Benefits Outsourcing
business? Are they committed to it the way we are?
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A.
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Aon
is committed to being the number one human capital services firm and
expanding their outsourcing capabilities and reach is an important part of
achieving that goal. Hewitt brings best-in-class proprietary products, a blue
chip client list and our reputation as the market leader in this space. Aon
has a benefits outsourcing business, primarily focused on the middle market.
They offer defined benefit (DB) and health and welfare (HW) services, but
also offer defined contribution (DC) on a smaller scale in some regions. In
total, their benefits outsourcing business is about $190 million in revenues
with about 100 clients, where Hewitts Benefits Outsourcing business is about
$1.5 billion with about 300 clients. The combined Aon Hewitt will be a much
more balanced business versus the competitive set, with about half of its
revenue coming from outsourcing. This too was a very attractive feature of
the deal, particularly given the recurring nature of the outsourcing business
and its embedded position within our clients workflows.
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NEW
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Q.
A.
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When will we know which Benefits platforms we will use?
These
decisions will be carefully considered and determined as part of the
integration process. What we can say now is that Hewitts large market TBA
system will continue to be the platform for large clients and those with
complex plans because Aon does not currently serve this market. Our
mid-market platforms are proven and resonating well in the market and we have
no plans to convert clients off those platforms.
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HR BPO
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Q.
A.
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|
Does
Aon have an HR BPO business today?
No. They
are excited about bringing this added capability to their offer.
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13
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Q.
A.
|
|
Does Aon plan to keep Hewitts HR BPO business?
Aon
is very excited about the HR BPO business and the growth prospects it brings
to the combined organization
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Q.
A.
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Hewitt: I heard were close to signing some new HR BPO
deals. Does this impact those wins at all?
It
shouldnt. We will reach out to our prospects just as we will our existing
clients so they understand what this potential change does and doesnt mean
for them.
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NEW
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|
Q.
|
|
What was appealing to Aon about our HR BPO business? Are
they committed to it the way we are?
Aon
does not have an HR BPO business similar to Hewitts and only participates in
a few stand-alone BPO domains. There is little to no overlap with Hewitts
BPO business. One of the biggest reasons Aon was interested in merging with
Hewitt was due to an interest in extending Hewitts HR BPO offering to a
broader client base. Aon was attracted to the recurring nature of the
business and how HR BPO work makes Hewitt a critical business partner for
clients. Aon was equally excited about the growth opportunity of the
business, was very impressed with the turnaround in HR BPO, and is excited to
bring the teams talents and skills into the new organization.
|
NEW
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Q.
A.
|
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How does being part of Aon benefit the HR BPO business?
Aon
has strong and long-lasting relationships with many of the worlds leading
companies. They believe that many of their current risk clients will be
interested in our HR BPO services and are eager to help us sell our HR BPO
offering.
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NEW
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Q.
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There are a number of BPO solutions being implemented now
for Hewitt (myHR, EWA, CompLink). Will we continue to move forward with
those? Will we use BPO services for the broader Aon organization?
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A.
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This
is a complicated question, and one that were actively working. The
integration team is looking at the commercial models for both organizations
and working through a process to make the right decisions for the newly
combined Aon Hewitt.
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Consulting
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Q.
A.
|
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How big is Aons Consulting business?
Aon Consulting serves more than 10,000 clients (this
includes their small outsourcing business) and has approximately $1.3B in
revenue. The combination will double the size of our consulting operation
immediately.
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Q.
A.
|
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What markets does Aon serve?
Aon has traditionally served mid-market clients, while
Hewitts focus tends to be on large clients in many geographies. A greater
portion of Hewitts revenue and profitability is generated inside of North
America, while Aon earns a larger share of its revenue internationally. Both
organizations have strong Consulting businesses, albeit with a different mix
of practices. The combination adds capabilities, tools, and resources to all
our practices and the growth focus areas of both organizations are
consistent.
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Q.
A.
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How will the combination benefit
Hewitts Consulting segment?
This move accelerates Hewitts growth strategy and also
addresses many of Hewitts current strategic priorities, including:
·
Expanding our
global footprint
·
Adding
brokerage capabilities
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14
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·
Growing our
health management practice to take capitalize on health care reform and build
out our global health management offer
·
Strengthening
our foothold in the middle market
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Technology
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NEW
|
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Q.
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I know Aon outsources their data center/computing
facilities to CSC. Will Hewitt do this as well after the merger?
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|
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A.
|
|
These
decisions will be made during the integration process after a thorough
analysis of service requirements and costs of the alternatives. Hewitts data
center operations are state-of-the-art and we have capacity that could be
used to support the needs of the broader Aon organization if that proves to
be cost effective.
Hewitts data center
capabilities were particularly attractive to Aon as they considered the
merger.
|
NEW
|
|
Q.
|
|
When will we know which platforms well use for basic
infrastructure, like e-mail, knowledge management, financial
systems, etc.?
|
|
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A.
|
|
These
decisions will be made during the integration process. Our goal will be a
common Aon suite of platforms at some point in the future, but there will
likely be a phased approach once we determine the best future state.
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India
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NEW
|
|
Q.
A.
|
|
Hewitt: Will there be job loss in India?
Our
capabilities in India were particularly attractive to Aon as they considered
the merger. While we can never guarantee jobs, our plan is to grow our
off-shore capabilities both to support Hewitts planned growth and to support
a change in Aons business model over time.
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******************************************************************************************************************************************************
Safe Harbor Statement
This communication contains certain statements related to
future results, or states our intentions, beliefs and expectations or
predictions for the future which are forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from either historical or
anticipated results depending on a variety of factors. Potential factors that
could impact results include: the possibility that the expected efficiencies
and cost savings from the proposed transaction will not be realized, or will
not be realized within the expected time period; the ability to obtain
governmental approvals of the merger on the proposed terms and schedule
contemplated by the parties; the failure of stockholders of Hewitt Associates, Inc.
(Hewitt) to approve the proposed merger; the failure of the stockholders if
Aon Corporation (Aon) to approve the issuance of Aon common stock to Hewitt
stockholders; the risk that the Aon and Hewitt businesses will not be
integrated successfully; disruption from the proposed transaction making it
more difficult to maintain business and operational relationships; the
possibility that the proposed transaction does not close, including, but not
limited to, due to the failure to satisfy the closing conditions; general
economic conditions in different countries in which Aon and Hewitt do business
around the world; changes in global equity and fixed income markets that could
affect the return on invested assets; fluctuations in exchange and interest
rates that could influence revenue and expense; rating agency actions that
could affect Aons ability to borrow funds; funding of Aons various pension
plans; changes in the competitive environment; changes in commercial property
and casualty markets and commercial premium rates that could impact revenues;
the outcome of inquiries from regulators and investigations related to
compliance with the U.S. Foreign Corrupt Practices Act and non-U.S.
anti-corruption laws; the impact of investigations brought by U.S. state
attorneys general, U.S. state insurance regulators, U.S. federal prosecutors,
U.S. federal
15
regulators, and regulatory authorities in the U.K. and other
countries; the impact of class actions and individual lawsuits including client
class actions, securities class actions, derivative actions and ERISA class
actions; the cost of resolution of other contingent liabilities and loss
contingencies; and the ability to realize the anticipated benefits to Aon of
the Benfield merger. Further information concerning Aon, Hewitt, and
their business, including factors that potentially could materially affect Aons
and Hewitts financial results, is contained in Aons and Hewitts filings with
the Securities and Exchange Commission (the SEC). See Aons and Hewitts Annual Reports on Form 10-K
and Annual Reports to Stockholders for the fiscal years ended December 31,
2009 and September 30, 2009, respectively, and other public filings with
the SEC for a further discussion of these and other risks and uncertainties
applicable to our businesses. Neither Aon nor Hewitt undertakes, and each of
them expressly disclaims, any duty to update any forward-looking statement
whether as a result of new information, future events or changes in their
respective expectations, except as required by law.
Additional Information
This communication does not constitute an offer to sell or
the solicitation of an offer to buy our securities or the solicitation of any
vote or approval. This communication is
being made in respect of the proposed transaction involving Aon and Hewitt. In connection with the proposed transaction,
Aon and Hewitt will be filing documents with the SEC, including the filing by
Aon of a registration statement on Form S-4, and Aon and Hewitt intend to
mail a joint proxy statement regarding the proposed merger to their respective
stockholders that will also constitute a prospectus of Aon. Before making any
voting or investment decision, investors and stockholders are urged to read
carefully in their entirety the joint proxy statement/prospectus regarding the
proposed transaction and any other relevant documents filed by either Aon or
Hewitt with the SEC when they become available because they will contain
important information about the proposed transaction. You may obtain copies of all documents filed
with the SEC regarding this transaction, free of charge, at the SECs website
(www.sec.gov), by accessing Aons website at www.aon.com under the heading Investor
Relations and then under the link SEC Filings and from Aon by directing a
request to Aon at Aon Corporation, 200 E. Randolph Street, Chicago, Illinois
60601, Attention: Investor Relations, and by accessing Hewitts website at
www.hewitt.com under the heading Investor Relations and then under the link Reports &
SEC Filings and from Hewitt by directing a request to Hewitt at Hewitt
Associates, Inc., 100 Half Day Road, Lincolnshire, Illinois 60069,
Attention: Investor Relations.
Aon and Hewitt and their respective directors and executive
officers and certain other members of management and employees may be deemed to
be participants in the solicitation of proxies in respect of the proposed
transaction. You can find information about Aons directors and executive
officers in its definitive proxy statement filed with the SEC on April 7,
2010. You can find information about Hewitts directors and executive officers
in its definitive proxy statement filed with the SEC on December 16, 2009.
Other information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become available. You can
obtain free copies of these documents from Aon and Hewitt using the contact
information above.
16
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