Towers Perrin, Watson Wyatt Commit to 'Merger of Equals'

Global professional services firms Towers Perrin (Stamford, Conn.) and Watson Wyatt Worldwide Inc. (Arlington, Va.) announced they will combine in a merger of equals to form a new, publicly listed company called Towers Watson & Co. The transaction is valued at approximately $3.5 billion.

According to the announcement, Watson Wyatt Chief Executive Officer John Haley will serve the combined company as CEO; Towers Perrin CEO Mark Mactas will serve as president.

"The combination of Towers Perrin and Watson Wyatt into Towers Watson will create one of the world's leading professional services firms, well positioned for sustained growth and profitability across all geographies and business segments," Haley said. "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."

Mactas added, "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."

The combined company, which is expected to have annual revenues in excess of $3 billion, will benefit from the scale of the two firms and anticipates approximately $80 million in pretax annual synergies, according to the announcment. 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, the announcement said.

Towers Perrin, which provides services in the areas of human capital strategy, program design and management, risk and capital management, insurance and reinsurance intermediation, and actuarial consulting, has 6,300 employees in 26 countries and is located on the Web at www.towersperrin.com. Watson Wyatt, which provides services in 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, has 7,700 associates in 34 countries and is located on the Web at www.watsonwyatt.com.

The companies hosted a live webcast and conference call on Monday to discuss the transaction. A replay of the webcast is available at either company's Web site.

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