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Towers Watson stalls Willis merger vote; shareholder wants more

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Towers Watson & Co. has delayed its special shareholders meeting on its proposed merger with Willis Group Holdings P.L.C. until no later than Dec. 16.

Following repeated calls by some investors to up the price Willis would pay to purchase Towers Watson, Towers Watson said Thursday that a one-time dividend to be paid to its shareholders would be increased to $10 from the original $4.87 per share. The dividend is to be paid to Towers Watson shareholders of record three days before the close of the deal, which initially was announced in June.

The shareholder meeting delay also announced Thursday further postponed a vote that had been moved to Friday from Wednesday. Published reports said Towers Watson lacked enough shareholder votes to approve the deal.

The proposed $18 billion deal came under fire from some analysts and shareholders as being unfair to Towers Watson stockholders.

“We are pleased to announce the revised terms of our proposed merger with Willis, which are based on our extensive engagement with stockholders and negotiation with Willis as well as our commitment to completing this compelling transaction,” Towers Watson Chairman and CEO John Haley said in a statement announcing the moves.

“Under the revised terms, Towers Watson stockholders will realize increased near-term value while maintaining the full long-term benefits of the transaction, which is expected to create approximately $4.7 billion in total incremental value by bringing together these two highly complementary businesses,” he said.

Chicago-based shareholder Driehaus Capital Management L.L.C., which was among the most vocal critics of the deal, said the revised offer is not enough.

“The increased consideration offered to Towers Watson shareholders today is an acknowledgement that the deal's initial terms were inadequate,” Driehaus said Thursday in an open letter to Towers Watson shareholders. “This is a step in the right direction, but the offer is still too low and closes neither the valuation gap nor the merger-of-equals price gap. A true merger of equals would dictate a special dividend of $17.72. In the interests of all involved, we urge Willis Group Holdings to put its best and final offer on the table.”

The agreement as it currently stands calls for Towers Watson to pay Willis a $60 million breakup fee to defray Willis' costs should Towers Watson shareholders reject the deal. However, an amendment to the agreement “eliminates Willis' obligation” to reimburse Towers Watson up to $45 million in expenses should Willis shareholders reject the deal.