NU Online News Service, March 14, 1:42 p.m.EDT

Aon stock is not performing as well as the rest of themarket because investors are waiting for the company to completeits move toLondon, an analyst says.

In a research report released by Deutsche Bank, analyst YaronKinar says shares in the Chicago-based insurance-brokerage firm areunderperforming the Standard & Poor's 500 Index by twopoints.

Since the announcement that Aon plans to relocate itsheadquarters toLondon, shares are up 3.8 percent, while the S&P500 is up 5.8 percent. Aon is also lagging its peer group, which isup 6.3 percent.

“While this is partially explained by disappointing resultsannounced [Feb. 3], we also attribute it to the transaction-relatedoverhang,” says Kinar.

The analyst saysU.S.institutional investors are avoidingpurchasing the stock until after the relocation “so as not to belevied a capital-gains tax.”

Shareholders are voting on the plan Friday and Kinar says themove is expected to be “completed in weeks” after the vote.

Moving to London, Aon will enjoy tax advantages because morethan half of its revenues are generated from outside of the UnitedStates. Kinar goes on to say that the firm's international businessis expected to grow, and by moving to the United Kingdom Aon willenjoy a lower corporate-tax rate and transfer profits with greatertax advantages in the future.

The company also can access $300 million in cash that is sittingon its international balance sheets “which should translate into asix million share buyback shortly after the move is completed.”

These advantages will be offset by a $20 million one-timetransaction charge and another approximate $20 million in ongoingexpenses.

Kinar says the move should serve as a catalyst for the stock,and any risks stemming from the move are viewed as minor.