12 October 2015 Insurance

Towers Watson shareholder urges ‘no’ vote for Willis merger

Investment adviser and Towers Watson shareholder Driehaus Capital Management (DCM) has urged fellow shareholders to vote against Towers Watson’s $18bn merger with big three broker Willis.

DCM, which owns 697,000 Towers Watson shares, has issued a white paper that provides detailed analysis of the proposed transaction and outlines its case for why it’s in the interests of fellow Towers Watson shareholders to vote against the proposed Willis transaction.

Matthew Schoenfeld, assistant portfolio manager, DCM, claimed that the standalone alternative offers Towers Watson shareholders between 39 percent and 53 percent more value than the proposed combination with Willis Group. He said that Towers Watson shares have declined by 15 percent since the transaction was announced, which reflected the “value-destructive nature of the combination”.

DCM also says the offer was made at a 9 percent discount, representing a ‘takeunder’ and making the firm the only US target this year not to receive a premium.

“The proposal ignores Towers Watson’s superior growth prospects and market valuation and implies a significant enterprise value premium for Willis Group despite WSH’s material operational challenges,” said the firm.

DCM also claimed that the proposal exposes shareholders to risk and debt-laden Willis restructuring and that synergy valuations have been materially inflated and fail to compensate for value destruction.

Towers Watson announced the merger with Willis back in June. It would see Willis shareholders take 50.1 percent of the company and Towers Watson shareholders take 49.9 percent.

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