By Lisa Kerner
Charlotte, N.C., June 29 - The boards of directors of Towers, Perrin, Forster & Crosby, Inc. and Watson Wyatt Worldwide, Inc. unanimously approved a definitive agreement in which the companies will combine in a merger of equals to form Towers Watson & Co.
Watson Wyatt shareholders will be entitled to receive 50% of the combined company's shares on a fully diluted basis.
According to Towers Perrin, its shareholders, who are all active employees of the company, plus a group of Towers Perrin employees to be designated to receive certain equity incentive awards, also will be entitled to receive 50% of the combined company's shares on a fully diluted basis.
Shares issued to Towers Perrin shareholders will be restricted shares and become freely tradable over a period of one to four years, a company news release said.
The implied equity value of the transaction is approximately $3.5 billion based on the closing price of Watson Wyatt common stock on Friday, the companies said.
A $65 million termination fee is included in the merger agreement, according to a form 8-K filed with the Securities and Exchange Commission.
Watson Wyatt chief executive officer John Haley will lead the combined company as CEO, while Towers Perrin CEO Mark Mactas will become president.
The transaction is expected to close in the fourth quarter of 2009, subject to shareholder approval.
Towers Watson expects to have annual revenues in excess of $3 billion and approximately $80 million in pretax annual synergies after three years.
Goldman, Sachs & Co. advised Towers Perrin, a Stamford, Conn.-based consulting firm.
Banc of America Merrill Lynch Securities advised Watson Wyatt, a human resources consulting firm based in Arlington, Va.
| Companies: | Towers, Perrin, Forster & Crosby, Inc. and Watson Wyatt Worldwide, Inc.
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| Announcement date: | June 29
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| Expected closing: | Fourth quarter of 2009
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| Termination fee: | $65 million
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| Stock price of Watson Wyatt: | NYSE: WW: $41.18 on June 26
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