Aon’s $4.9 billion acquisition of Hewitt Associates today has the look and feel of deals done in another era. The deal is part cash and part stock – with the cash portion being funded in part by a “bridge loan.” Bridge loans were issued by banks with the idea that a borrowing would be temporary and refinanced as soon as possible to take the risk off the banks’ books. When markets were favorable, these bridge lending facilities were profitable. But they cost the banks money when loans couldn’t be refinanced. The bridge lenders for this deal are Credit Suisse and Morgan Stanley.
The markets seem to be satisfied that a higher offer is not forthcoming – target Hewitt’s stock is trading at $46.85, below the $48.39 value of the cash-stock deal.