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Everyone is for sale, but who's buying?

Dear friend,

Today we awake to rain and another pile of rumour, half truth and not-so-idle conjecture.

Is Willis really going to buy Marsh Mac?

Is Gallagher Re up for sale?

I honestly don’t know the answer to either of these questions — in fact nobody knows except Mr Glaser, Mr Plumeri and Mr Gallagher.

And while we’re at it let’s toss Benfield, JLT and Heath Lambert into the permanently simmering pot marked ‘merger rumours’.

One thing’s for sure — if Willis were to mount a bid for Marsh it would have to grub around for an awful lot of cash — and we all know that money’s tight right now.

If they were to put up the money, lenders and investors would have to believe that Mr Plumeri would make a much better job of running MMC than current management. But anyone who has ever worked in a large people business knows that when an organisation hits a certain size, it starts to get extremely difficult to control.

You suddenly move from focusing on your clients and their business to organising corporate structures and settling arguments about how brokerage is shared out.

That has been the challenge at Marsh and Aon for almost a decade, and it has been one that has clipped the managerial wings of many of the brightest inside and outside of our business — that is until Mr Case came in and started knocking Aon into shape.

Marsh’s share price has gone nowhere in three years. But guess what? Willis’ has also gone nowhere in 3 years.

But hang on a mo — which peer group broker’s share price has almost doubled over the same period? You guessed it, Aon.

Aon’s sustained improvement and a Willis bid (should it materialise) proves that there is extremely deep value buried somewhere in MMC. It just needs the right catalyst to go in and extract it.

But here’s what I find funny — we love boasting about our system of competitive western capitalism, don’t we?

We bang on about how it drives the weak to the wall and allows the strong to prosper.

So why isn’t it Aon bidding for MMC?

We know the answer is that Aon is already enormous and that any such move would probably be blocked by the competition authorities in a number of different locations worldwide.

But is it really such a silly idea?

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