By Sarah Sipek
Jun. 30, 2015
Willis Group Holdings and Towers Watson & Co. announced a proposed merger between the two companies valued at approximately $18 billion. The board of directors of each company approved the deal, which is subject to customary closing conditions and regulatory approvals. The combined company will be called Willis Towers Watson.
Willis shareholders will own 50.1 percent of the company, while Towers Watson shareholders will control 49.9 percent. Towers Watson shareholders will receive 2.6490 Willis shares for each Towers share. They will also receive a one-time cash dividend of $4.87 per Towers share. The deal is expected to close by Dec. 31.
The planned merger is intended to create an integrated global advisory, broking and solutions provider to serve a broad range of clients in existing and new business lines, said John Haley, chairman and CEO of Towers Watson in a written statement.
“We see numerous opportunities to enhance our growth profile by offering integrated solutions that leverage Willis’ global distribution network and superb risk advisory and re/insurance broking capabilities to deliver a more robust set of analytics and product solutions across a broader client base, including accelerating penetration of our Exchange Solutions platform into the fast growing middle market,” Haley said.
Willis Towers Watson will have approximately 39,000 employees in more than 120 countries. The companies anticipate between $100 million and $125 million in cost savings within three years of the closing.
The merger is not without precedence. In recent months several large insurers have made moves to consolidate the industry.
“I don’t know how much this is about the private exchanges for both, but this speaks to consolidation in the insurance industry,” said Rob LaHayne, director of brokerage services at Namely Inc., a multisuite HR software company. “Aetna, Cigna and Anthem have all expressed interest in acquiring Humana. And Aetna recently acquired bswift.”
Whether the consolidation is beneficial is up for debate, LaHayne said June 30 from the exhibit hall floor of the Society for Human Resource Management 2015 conference in Las Vegas.
“I’m not sure if it’s healthy,” LaHayne said. “It’s almost like the Dodd-Frank effect,” he added, referring to the Dodd-Frank Wall Street Reform and Consumer Protection Act. “All of a sudden you’re left with four big banks. It becomes a less competitive market, although they’d probably tell you differently.”
LaHayne hinted at the fact this could have to do with the influx of technology in the formerly stodgy insurance industry.
“The technologies are coming together,” he said. “They’re all trying to find better technologies as it continues to disrupt the health insurance space.”
Workforce Managing Editor Rick Bell contributed to this story from the SHRM 2015 conference.
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