TW is expected to benefit from the scale of the combined companies and anticipates approximately $80 million in pretax annual synergies
Towers, Perrin, Forster & Crosby (TP), a risk and financial management firm, and Watson Wyatt Worldwide (WW), a business partner to the financial issues organisations, are going to form a combined company, Towers Watson (TW). Boards of Directors of both the companies have unanimously approved the agreement to combine in a merger of equals.
As per the agreement, WW shareholders will be entitled to receive 50% of the TW’s shares on a fully diluted basis. TP shareholders and a group of TP employees, designated to receive equity incentive awards, will be entitled to receive 50% of the TW shares on a fully diluted basis. Unlike WW, TP shareholders will be issued restricted shares that become freely tradable over a period of one to four years.
TW is expected to benefit from the scale of the combined companies and anticipates approximately $80 million in pretax annual synergies. These benefits would increase growth and revenues, greater depth of talent for clients, and increased profitability through operating synergies, the company opines.
The equity value of the transaction is around $3.5 billion, based on the closing price of WW common stock on June 26, 2009. John Haley, CEO of WW, will serve as CEO of the combined entity, while TP CEO, Mark Mactas will serve as President.