US: Towers should reject $8.7 billion Willis Deal, advisers say

Proxy advisory firm ISS recommended that shareholders vote against the proposed merger of Towers Watson and Willis Group Holdings, dealing a blow to the all-stock deal that has come under pressure from investors.

Insurance broker Willis Group, whose second largest shareholder is activist investor ValueAct, agreed in June to combine with financial management services provider Towers Watson, in a transaction that carried an implied equity value of about $18 billion.

The merger valued Towers Watson at a 9 percent discount at the time of the announcement. Driehaus Capital, which owns 1.4 percent of the shares, publicly criticized the deal last month, saying Willis – the weaker of the two companies – should increase the cash dividend portion of the agreement.

ISS said the potential long-term benefits of the combination are compelling, but shareholders should vote against it.

“It is not at all that clear that realizing those opportunities necessitates taking a steep discount to the market value of their shares – or that Towers is, in fact, the party in “need” of this transaction,” ISS said.

Full content: The Wall Street Journal

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