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Towers Watson/Willis merger takes another hit

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The proposed merger of Towers Watson & Co. and Willis Group Holdings P.L.C. took another salvo as proxy advisory firm Glass Lewis & Co. L.L.C. recommended that Towers shareholders should vote against the deal.

In a Dec. 1 report, Glass Lewis maintains the deal is “not structured in a manner which is fair or appropriately attractive for Towers Watson shareholders” and that Towers shareholders should reject the proposed $18 billion deal announced in June, which has drawn criticism from investors and analysts alike.

In the report, Glass Lewis cited a poor transaction structure, poor transaction timing, inadequate valuation and unfair transfer of shareholder value as its concerns.

A Towers Watson spokesman said the firm had no comment on the report.

After substantial investor pushback on the deal, Towers said on Nov. 19 that it would raise the one-time cash dividend for the deal to $10 per share from $4.87.

This, however, was not enough to sway the proxy advisory firm.

“We believe that the relatively small increase in the special cash dividend represents an insufficient improvement and that the merger under the amended terms continues to inadequately compensate Towers Watson shareholders for the company's past and prospective financial contributions, its unaffected pre-announcement market valuation and the effective loss of ownership control,” Glass Lewis said in its report.

In a recent filing with the SEC, Towers showed the annual pro-forma revenues of the combined entity at $5.56 billion and pro-forma net income of $572.0 million for the nine months ended Sept. 30.