Towers Watson and Willis Group Holdings have agreed to a merger deal valued at $18 billion. The deal will see the two companies combine complementary capacities to stay competitive in a global market, save between $100-125 million over three years, as well as provide each other with growth and expansion opportunities. The deal is expected to be closed by the end of the year.
Willis Group Holdings is a risk advisor, insurance brokerage and reinsurance brokerage company that offers its clients expertise, teamwork, innovation and market-leading products and professional services in risk management and transfer. The firm was founded in London in 1828 and currently employs approximately 18,000 over 400 offices in 120 countries.
In a bid to create a complementary business that will provide both brokerage and advisory, consulting firm Towers Watson and Willis Group Holdings decided to merge in an entity with combined revenues of more than $8.2 billion. The deal sees Towers Watson agree to an all stock merger valued at $18 billion, with Willis shareholders to own approximately 50.1% of the combined entity and Towers Watson shareholders 49.9%. The combined entity will be called Willis Towers Watson, with its tax base in Ireland – where Willis group already has its incorporation since in 2010 moving from Bermuda. The new firm is expected to have a combined headcount of 39,000 across 120 countries.
Besides creating capability synergies through which the combined company can continue to compete with its rivals such as Marsh & McLennan Companies and Aon, the deal is also expected to create a range of cost saving, with a $100-125 million save from reductions in duplicate costs and through the economies of scale. A further bonus is that Ireland continues to have a low corporate tax rate, at 25%, thereby reducing on the 34% paid by Towers Watson currently.
The combined entity will be able to better provide expansion opportunities for Willis’ offerings with Towers Watson’s already extant position in the US property and insurance market. For Towers Watson, Willis’ international presence will help it become expand across the globe.
“The rationale for the merger is powerful – at one stroke, the combination fast-tracks each company’s growth strategy and offers a truly compelling value proposition to our clients,” explains Dominic Casserley, CEO of Willis. “Together we will help our clients achieve superior performance through effective risk, people and financial management. We will advise over 80% of the world’s top-1000 companies, as well as having a significant presence with mid-market and smaller employers around the world.”
Following the merger, Willis Chairman James McCann will come to be the Chairman of the combined board. Towers Watson CEO John Haley will be CEO, while Casserley will take on the role of deputy CEO of the merged firm. Haley and Casserley will also serve on the board – along with six Willis Directors and six from Towers Watson.