OREANDA-NEWS. Willis Group Holdings plc (NYSE:WSH) today affirmed its support for its proposed merger with Towers Watson (Nasdaq:TW) following recommendations issued by Institutional Shareholder Services Inc. (“ISS”).

“Naturally we are pleased that ISS recognises the ‘strategic merits and long-term benefits of the merger’, and with their recommendation that Willis shareholders vote for the transaction,” said Dominic Casserley, Chief Executive Officer of Willis.  “However, we are disappointed with their conclusion that Towers Watson shareholders should not support the merger.  We believe that this perspective neglects the estimated $4.7 billion in incremental value for shareholders that we expect through clearly-identified cost, tax and revenue synergies.”

“We remain convinced that the merger is in the best interests of both sets of shareholders and represents value creation that neither company could realize on its own,” said Mr Casserley.  “The Willis Board of Directors continues to recommend that shareholders vote for all proposals at the upcoming extraordinary general meeting.”

In its reports, ISS acknowledges the strategic benefits, cost synergies and value creating potential of the deal[1]:

[1] Permission to use quotes from the ISS reports was neither sought nor obtained.

  • Given the “strategic rationale for the transaction, the positive market reaction of Willis shares, and the expected cost savings as a result of the merger, a vote FOR this proposal is warranted.”
  • “The combined company would also present a growth opportunity for Willis' existing insurance business into larger North American companies.” 
  • “The potential long-term benefits of the deal appear compelling…"
  • “A combined entity would benefit from certain factors, including cost synergies and the potential revenue opportunity of better mating Towers' healthcare exchange with Willis' distribution network.”
  • “Integrating the [exchange] product with a powerful distribution system is more critical than a backward-looking analysis of growth rates can convey.”

As previously disclosed, Willis and Towers Watson expect to generate $375-$675 million in incremental revenues through expanded distribution of Towers Watson’s healthcare exchange, expansion of Willis’ large market P&C brokerage business, and further globalization of Towers Watson’s health and group benefits consulting business, all through opportunities that only this merger can create.  The companies expect $125 million in annual merger related cost savings and approximately $75 million in annual tax savings.  These revenue and cost synergies are incremental to any cost savings expected from Willis’s Operational Improvement Program, which is on pace to deliver $325 million in annual savings by 2018.

Willis will hold an extraordinary general meeting of its stockholders to vote on the proposed merger with Towers Watson at 9:30 a.m. on November 18, 2015 at the Pierre Hotel, 2 East 61st Street, New York, NY 10065.  Willis stockholders of record as of the close of business on October 2, 2015 will be entitled to vote at the meeting.