Towers Watson, Willis Adjourn Meetings on $18 Billion Merger
November 18 2015 - 9:40AM
Dow Jones News
Towers Watson & Co. plans to adjourn a shareholder meeting
set for Wednesday after failing to get enough investor support for
its merger with brokerage Willis Group Holdings PLC, according to a
person familiar with the matter.
A minority of Towers Watson shareholders had voted in support of
the deal, the person said. Willis is also postponing a separate
vote of its own shareholders that had also been set for Wednesday,
the person said.
Both meetings will be reconvened Friday, the person said.
The companies are weighing whether to sweeten the terms of the
deal, which currently gives Towers Watson shareholders Willis stock
worth about $117 a share plus a cash dividend of $4.87 a share,
people familiar with the matter said.
One option would be to increase the cash dividend, the people
said. However, they said the companies could leave the terms
unchanged and continue to lobby investors over the next few days in
the hopes of eking out a majority.
One concern is that by increasing the consideration to Towers
Watson shareholders, the deal would become less attractive to
Willis's investors, whose support is also needed.
The $18 billion merger drew criticism shortly after it was
announced in June. Towers Watson investors complained about the
price, which valued the professional-services company at a 9%
discount to where its shares had traded the day before.
Hedge fund Driehaus Capital Management LLC, which bought about
1% of Towers Watson after the deal was announced, wrote public
letters urging investors to vote against it. The firm said it
undervalued Towers Watson, especially the company's
health-insurance exchange business.
The companies said the deal would generate long-term growth, in
large part by cross-selling Towers Watson's accounting and
consulting services to Willis's insurance clients and vice versa.
They also pointed to tax savings available through Willis's Irish
domicile, which would lower the combined company's rate.
Jeff Ubben, CEO of hedge fund ValueAct Capital LP, which owns
about 10% of Willis, has championed the deal and sharply criticized
its detractors. In a statement last week, he criticized proxy
adviser Institutional Shareholder Services Inc., which had urged
Towers Watson investors to reject the deal.
"ISS encouraging stockholders to walk away from a highly
accretive deal if they do not receive a renegotiation of the deal
economics incentivizes the very shortest-term profiteering,"
ValueAct said in the statement. "When this goes badly, longer-term
stockholders suffer the opportunity costs of missed value
creation."
The combination would create a professional-services giant with
revenue of $8.2 billion and earnings before income, taxes,
depreciation and amortization of $1.7 billion a year.
Write to Liz Hoffman at liz.hoffman@wsj.com
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(END) Dow Jones Newswires
November 18, 2015 09:25 ET (14:25 GMT)
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