Leader

Is Joe Plumeri really interested in buying the whole of the Marsh & McLennan group? If news of the Willis approach, which whistled across the Atlantic at the end of last week, is to be taken seriously then his motives are to be questioned.

Willis would have to lay its hands on an asking price of as much as $15bn to fund any acquisition, unlikely given this period of economic gloom. Marsh, likewise, has faced such internal instability and turmoil since the Spitzer commission disclosure scandal in the US four years ago that it would have to justify the sale to shareholders as more lucrative than hiving off its individual divisions to private equity houses.

After all when it finally does find a replacement for its global chief executive Michael Cherkasky, its new boss will have take a view on whether he fixes the firm or sells it.

And there lies the clue. Perhaps part of Plumeri’s end game is to be in the best negotiating position when, and if, the Marsh broking division comes into play as a separate entity in its own right.

By warming the market up to the prospect of a full takeover Plumeri may have just softened the blow to staff and regulators alike for when he picks off the Marsh arm from the group.

However if any deal was to become a reality the likelihood is that it would still face heavy scrutiny from competition regulators on both sides of the Atlantic.

The rest of the market would also spot the room at the top of the market. The risk for the two parties involved is that this room may quickly turn into a vacuum whereby the poaching eye of rival brokers, start ups and ambitious consolidators pick off the talented teams and clients of the new mega company in a period of transition.

Willis for sure, would almost certainly try to capitalise by reducing Marsh’s high cost base and would face a gigantic challenge and headache in trying to harmonise the cultures of the two companies and the inevitable upheaval and disruption. Suddenly the deal may not appear as attractive as it first appears.