According to this press release sent out early this morning, Willis Group Holdings and Towers Watson just announced the signing of a definitive merger agreement under which the companies will combine in an all-stock merger of equals transaction.
According to the release, the implied equity value of the transaction is approximately $18 billion. The transaction has been unanimously approved by the Board of Directors of each company. The combined company will be named Willis Towers Watson.
John Haley, Chairman and Chief Executive Officer of Towers Watson, said, “This is a tremendous combination of two highly compatible companies with complementary strategic priorities, product and service offerings, and geographies that we expect to deliver significant value for both sets of shareholders.”
Haley says he also expects to “realize substantial efficiencies by bringing our two organizations together, and have a well-defined integration roadmap to capitalize on identified savings, ensure the strongest combination of talent and practices, and realize the full benefits of the merger for all of our stakeholders.”
There’s no word yet on how — or even if — the two organizations will combine their robust human-capital management practices, but we’ll keep you posted here when we learn the answer to that one. (Calls to both sides for comment have yet to be returned.)
Mark Stelzner, founder and managing principal of Inflexion Advisors in San Francisco, shared his thoughts on the merger with HRE Daily earlier today.
Towers Watson and Willis, he said, complement each other in many ways, creating potential for stronger offerings for the newly combined organization and, by extension, its clientele.
“Like any merger of this size and complexity,” he said, “clarity of purpose, organizational restructuring, operational rationalization and cohesive external messaging are going to materially impact the success or failure of the newly combined entity.”
Stelzner’s advice to existing clients of both organizations: Take the time to weigh whether the emerging philosophy, strategy, services and product offerings are strategically aligned with their current and future needs.
Meanwhile, Liz DeVito, an associate director at Kennedy Consulting Research & Advisory in Keene, N.H., who specializes in HR consulting and covers the benefits, human capital, outsourcing and investments markets, says the merger’s timing may put TW in a precarious position from a talent perspective.
“TW is now vulnerable to client and talent poaching,” she says. “The deal has six months to close, which is a long time, and I’m sure the competition is drawing up campaigns to poach consulting clients from TW, especially in the areas of rewards, talent management and HR transformation.”
DeVito says she was at Mercer when Aon bought Hewitt and Towers Perrin & Watson Wyatt merged, “so I speak from experience. The competition will be able to exploit client anxiety over the next few months.”
She says the same goes for consulting talent as well.
“I’m sure Willis-TW leadership will come up with an attractive stock options program to retain key talent, but there will be some leakage,” she says.
What I have noticed in my research over the past six months is that the HR consultancies are poaching talent right and left. I’ve never seen it so active in my three years of covering this market.
They’re poaching from the Big Four human capital consulting practices and strategy firms, as well as each other, she says.
“They’re looking for consultants with very specific capabilities as they build out next generation service offerings in talent management, HR technology advisory, HR analytics (particularly strategic workforce planning), HR transformation, organization design, and change management. And these are all areas where TW has very strong capabilities and talent.
“I’m sure there were a lot of phone calls today from TW consultants to the competition,” DeVito says.Twitter It!