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LONDON -- Willis Corroon Group P.L.C. came a step closer to closing its deal with Trinity Acquisition P.L.C. last week, even as rumors about potential pressure that could unravel the deal spread throughout the market.
While most eyes were focused on Marsh & McLennan Cos. Inc.'s $2 billion offer to acquire Sedgwick Group P.L.C., several market observers turned their attention to the potential effects the M&M/Sedgwick deal might have on Trinity's L951 million ($1.56 billion) offer last month for a majority stake in Willis (BI, July 27).
Speculation centered around the disparity between the prices offered for each broker, raising eyebrows that Willis' shareholders may not accept Trinity's original offer. That speculation was exacerbated when Trinity announced it would extend its offer for another two weeks, leading to speculation that a counterbid for Willis might emerge.
Last Wednesday, however, Trinity shortened the timetable and reduced acceptance conditions, effectively sealing the deal.
Marsh's 225 pence ($3.68) per share offer for Sedgwick represents a 58% premium for shareholders based on Sedgwick's 142.5 pence ($2.33) stock price last Monday, the day before that deal was announced.
Comparatively, Trinity, a consortium led by U.S. private equity firm Kohlberg Kravis Roberts & Co. L.P., offered 200 pence ($3.27) per Willis share, which represents a 12% premium over a stock price of 178.5 pence ($2.92) on July 21, the day before the deal was announced.
Willis shareholders originally had until last Monday to tender 90% of Willis' voting rights to Trinity, but only 65% of Willis stock had been tendered.
As a result, Trinity extended its offer until Sept. 7 but subsequently shortened the timetable to Sept. 2 and reduced the acceptance condition to more than 50% of voting rights from 90%.
Under the rules of the Securities and Exchange Commission, Trinity is required to give five business days' notice of such a change in the acceptance condition.
As a result, if Trinity has at least 50% of the voting rights of Willis and all regulatory approvals are received, the deal will be completed Wednesday.
As of last week, all necessary regulatory consent had been received, with the exception of approval from the U.K. Treasury Department, which was expected last Friday.
Kenneth Pinkston, chairman of Willis Corroon Corp. in Nashville, Tenn., said that the timing of the two announcements was coincidental.
He said all the plans with Trinity had been made ahead of the acquisition announcement by M&M and that it was anticipated in advance that the deal could change.
"It would be quite Machiavellian" to think that either of the deals made by Marsh or Willis would be in reaction to the other. "Everyone is conducting their own business," he said.
Mr. Pinkston pointed out that Willis Corroon has received no other counteroffers.
However, shareholders who have already tendered their acceptances could still change their minds by Wednesday, Mr. Pinkston said.
In a press release giving Trinity's five-day notice of the change in the acceptance condition, "holders of Willis Corroon securities who have already accepted the offer but whose willingness to accept would be affected if the acceptance condition were reduced to a lower level than 90%, may wish to consider withdrawing their acceptances now."