Towers Perrins and Watson Wyatt Merge !

 In comp bens, Merger, Towers Perrin, Watson Wyatt

Towers, Perrin, Forster & Crosby, Inc. and Watson Wyatt Worldwide, Inc. (NYSE, NASDAQ: WW) today announced that their respective Boards of Directors have unanimously approved a definitive agreement under which Towers Perrin and Watson Wyatt will combine in a merger of equals to form a new, publicly listed company called Towers Watson & Co. Based on the closing price of Watson Wyatt common stock on June 26, 2009, the implied equity value of the transaction is approximately $3.5 billion. Watson Wyatt Chief Executive Officer John Haley will serve the combined company as Chief Executive Officer; Towers Perrin Chief Executive Officer Mark Mactas will serve as President.

“The combination of Towers Perrin and Watson Wyatt into Towers Watson will [private]create one of the world’s leading professional services firms, well positioned for sustained growth and profitability across all geographies and business segments,” said Mr. Haley. “The combination will further strengthen our core service lines while offering our clients an enhanced portfolio of proven offerings across a range of financial, risk and people management areas. Towers Watson will have tremendous global reach and service breadth to meet the growing needs of the world’s largest multinational corporations. As we provide more value for our clients, we in turn create value for our people and our shareholders.”

Mark Mactas, Chief Executive Officer of Towers Perrin, said, “This is an important transaction for our respective organizations that positions us well for a future of accelerated growth and higher levels of profitability. The fit between our firms is excellent, starting with a deep commitment to client service and shared values of integrity, professionalism and respect. Our service lines and geographic strengths are also highly complementary, which creates great opportunities for growth. We couldn’t be more excited about this combination, which will change the landscape of our industry.”

Towers Watson, which is expected to have annual revenues in excess of $3 billion, will benefit from the scale of the combined companies and anticipates approximately $80 million in pretax annual synergies. While significant savings are expected during the first two years following completion of the transaction, it is anticipated that full realization of synergies will take three years and cost approximately $80 million. Towers Watson will also have significant non-cash expenses during the first two years following completion of the transaction. The transaction is expected to be accretive to diluted earnings per share within three years following the consummation of the transaction.

Strategic & Financial Benefits of the Transaction

* Strengthened Organizational Capabilities: Towers Watson will be stronger than the sum of its parts, positioned for industry leadership long into the future and a more effective competitor that can provide additional services to our existing and prospective clients.
* Expanded Global Presence with Geographically Diverse Revenue Base: The combination will expand our global footprint to optimize service, global reach, and seamless delivery for our clients. Towers Watson will operate within four geographic regions: North America, EMEA (Europe, Middle East and Africa), Asia-Pacific, and Latin America.
* Enhanced Products and Services: Towers Watson will focus its operations on three segments: Benefits, Talent and Rewards, and Risk and Financial Services. These will build on existing thought leadership and research, and will be supported by a more comprehensive set of services, from strategic advice to solutions and implementation.

We believe that these benefits will lead to:

* Increased Growth and Revenue: For our shareholders, we expect to deliver economies of scale, diversification of our current businesses, and increased growth and investment potential.
* Greater Depth of Talent for Our Clients: We expect to provide broader solutions and a deeper talent pool across a wider geographic footprint.
* Greater Opportunities for Our People: For our people, there will be an expanded set of career opportunities, a stronger brand, greater access to resources, and a broader network of colleagues.
* Increased Profitability through Operating Synergies: Towers Watson expects to have an annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) margin of 17%+ post-integration. We expect $80 million potential cost synergies on a year three run rate, with $80 million in expected one-time costs.

Transaction Terms

Under the terms of the agreement, Watson Wyatt shareholders will be entitled to receive fifty percent of the combined company’s shares on a fully diluted basis. Towers Watson shares issued to Watson Wyatt shareholders in the merger will be freely tradable.

Towers Perrin shareholders, who are all active employees of Towers Perrin, plus a group of Towers Perrin employees to be designated to receive certain equity incentive awards, will be entitled to receive fifty percent of the combined company’s shares on a fully diluted basis. Towers Watson shares issued to Towers Perrin shareholders will be restricted shares that become freely tradable over a period of one to four years.

Conference Call

The companies will host a live webcast and conference call on Monday, June 29, 2009 beginning at 8:30 a.m. Eastern Time to discuss the transaction. The webcast can be accessed via the Internet by going to the Investor Relations section of A replay will be available after the live call and may be accessed via either company’s website at or

Approvals and Time to Close

The transaction is subject to approval by each company’s shareholders and the satisfaction of customary closing conditions and regulatory review and approvals, including competition reviews in the U.S. and other countries. Subject to satisfaction of these conditions, the companies anticipate a shareholder vote in the fourth quarter of 2009 and a closing date as soon as possible thereafter.


Goldman, Sachs & Co. is acting as financial advisor and Milbank, Tweed, Hadley & McCloy LLP is acting as legal advisor to Towers Perrin. Banc of America Merrill Lynch Securities is acting as financial advisor and Gibson, Dunn & Crutcher LLP is acting as legal advisor to Watson Wyatt.[/private]

About Towers Perrin

Towers Perrin is a global professional services firm that helps organizations improve performance through effective people, risk and financial management. The firm provides innovative solutions in the areas of human capital strategy, program design and management, and in the areas of risk and capital management, insurance and reinsurance intermediary services, and actuarial consulting. Towers Perrin has 6,300 employees located in 26 countries and is located on the Web at

About Watson Wyatt

Watson Wyatt (NYSE, NASDAQ: WW) is the trusted business partner to the world’s leading organizations on people and financial issues. The firm’s global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,700 associates in 34 countries and is located on the Web at

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