Towers Watson has struck a deal with US based Medicare insurer Extend Health to acquire the firm for about $435m in cash, less net debt and certain transaction costs.

The acquirer said that it anticipates the acquisition will be dilutive to Adjusted EPS by 2% or less in year one, and then slightly accretive in year two.

Upon completion of the merger, Extend Health will run as a new business unit named Exchange Solutions within Towers Watson, joining its three existing segments of Benefits, Talent and Rewards, and Risk and Financial Services.

The Co-Founder and CEO of Extend Health will spearhead the new segment with more than 300 employees.

The integration of the two pioneer firms will provide a cost-effective benefit and retirees to increase plan choice and buying power of health insurance coverage, claims Towers Watson.

Towers Watson CEO John Haley said, "The combination of Towers Watson benefits expertise and resources, and Extend Health’s proven infrastructure and scalable exchange platform, positions us well to meet the needs of employers and retirees now and in the future."

The Extend Health solution allows retirees the opportunity to select from thousands of private Medicare plans from more than 75 national and regional insurance companies, and employers to provide access to individual coverage, typically with a defined contribution subsidy.

The deal requires clearance under the Hart-Scott-Rodino Antitrust Improvements Act and also is subject to customary closing conditions, which is expected to complete within two months.