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Investor dubs proposed Willis, Towers Watson merger terms as 'predatory'

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The terms offered to Towers Watson shareholders in its proposed merger with Willis Group Holdings are “predatory,” according to an investment advisor that opposes the deal.

In a letter dated Wednesday, Chicago-based Driehaus Capital Management L.L.C. reiterated its opposition to the proposed merger, which was announced in late June. Towers Watson shareholders are slated to vote on the deal on Nov. 18.

Under the proposed $18 billion transaction, shareholders of London-based brokerage Willis will own about 50.1% of the combined company that is to be called Willis Towers Watson, while shareholders of New York-based risk management and human resources consultant Towers Watson will hold about 49.9%.

“The deal offered to Towers Watson shareholders is predatory,” said the letter. “It asks Towers Watson shareholders to internalize 9.1% of value destruction to enrich Willis Group Holdings shareholders.”

In September, Driehaus urged shareholders — of which it is one — to reject the deal. Citing its own analysis, Driehaus said remaining a standalone entity offered Towers Watson shareholders between 39% and 53% more value than the proposed combination. In addition, Driehaus said at the time that “the offer was made at a 9% discount, representing a 'takeunder', and that the proposal ignored Towers Watson's “superior growth prospects and market valuation.”

“It is quite clear that Towers Watson shareholders will not support the transaction on current terms,” said Driehaus in Wednesday's letter. “There are two paths forward: (1) Either a fair offer is presented to Towers Watson shareholders, or (2) Towers Watson and Willis Group resume life as standalone entities upon the deal breaking.”

Towers Watson reiterated its support of the deal.

"We remain confident in the significant value creation potential of the Willis/Towers Watson merger, which is expected to deliver approximately $4.7 billion in incremental value to shareholders,” a spokesman for Towers Watson said in an email. “Towers Watson continues to have positive conversations with its shareholders, who have benefitted from the Company's proven track record of delivering value through organic growth and successfully executing value-creating transactions. We strongly believe the Willis/Towers Watson merger is in the best interest of all shareholders and remain committed to completing the transaction.”