Rivals Towers and Watson to merge

Towers Perrin and Watson Wyatt Worldwide are to be brought together in a new company called Towers Watson & Co in what is being billed as a merger of equals.

Watson Wyatt chief executive John Haley will take the role of chief executive of the new entity while Towers Perrin chief executive Mark Mactas will become president.

Towers Perrin currently has 6,300 employees located in 26 countries. Watson Wyatt has 7,700 associates in 34 countries. Towers Watson is expected to have annual revenues in excess of £1.8bn and hopes to benefit from around £46m in pretax annual cost savings.

Towers Watson says it will be able to achieve an expanded global presence with a geographically diverse revenue base, operating within four geographic regions: North America, EMEA (Europe, Middle East and Africa), Asia-Pacific, and Latin America. It will focus its operations on three segments: benefits, talent and rewards, risk and financial services.

Under the terms of the agreement, Watson Wyatt shareholders will be entitled to receive 50 per cent of the combined company’s shares on a fully diluted basis. Towers Watson shares issued to Watson Wyatt shareholders in the merger will be freely tradable.

Towers Perrin shareholders, who are all active employees of Towers Perrin, plus a group of Towers Perrin employees to be designated to receive certain equity incentive awards, will be entitled to receive 50 per cent of the combined company’s shares on a fully diluted basis. Towers Watson shares issued to Towers Perrin shareholders will be restricted shares that become freely tradable over a period of one to four years.

Haley says: “The combination of Towers Perrin and Watson Wyatt into Towers Watson will create one of the world’s leading professional services firms, well positioned for sustained growth and profitability across all geographies and business segments. The combination will further strengthen our core service lines while offering our clients an enhanced portfolio of proven offerings across a range of financial, risk and people management areas. Towers Watson will have tremendous global reach and service breadth to meet the growing needs of the world’s largest multinational corporations. As we provide more value for our clients, we in turn create value for our people and our shareholders.”

Mactas says: “This is an important transaction for our respective organisations that positions us well for a future of accelerated growth and higher levels of profitability.”