Watson Wyatt Merges With Towers

Zacks Investment Research
updated | Zacks.com

Human resource consulting major Watson Wyatt Worldwide Inc. recently declared the completion of its $4.0 billion merger deal with competitor Towers Perrin Forster & Crosby, in what may be described as a big-ticket merger. The combined entity is called Towers Watson & Co. (TW).

The major competitors of Towers Watson are Hewitt Associates (NYSE:HEW) and Marsh & McLennan Companies (NYSE:MMC). However, the merger increases the size and scalability of the combination, which should help it grab additional marketshare going forward.

Moreover, Towers Perrin has been particularly strong in retirement consulting and risk management, which can be optimally used by the combination. The combined entity declared that it would pay $200 million of cash and issue one-year notes worth $200 million to those former employees of Towers Perrin that willfully chose to depart from the company. Towers Watson expects to issue Class A common shares of about 46.9 million and Class B common shares of about 29.5 million.

Although the formalities have been completed, approval from both companies’ shareholders is pending. As this merger will benefit the shareholders of both the companies, so we believe that the process of seeking approval from shareholders will be smooth.

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