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Towers Watson stock price fluctuates after Willis deal

Posted On: Jul. 1, 2015 12:00 AM CST

Towers Watson stock price fluctuates after Willis deal

The stock price of Towers Watson & Co. rebounded a little Wednesday after dipping in the wake of the company's announced merger with Willis Group Holdings P.L.C., a sign that investors could be embracing the logic of the deal, according to analysts.

Towers stock closed at $125.80 per share Tuesday, off almost 9%, after dipping as low as $124.83 during the day on the heels of the merger announcement.

By midday Wednesday, however, the stock had partially recovered to $129.55 per share as investors digested the deal.

“From a point-in-time perspective, it wasn't a great deal for Towers compared to where it was trading Monday night, so you have that initial disappointment,” said Meyer Shields, managing director at Keefe Bruyette & Woods Inc. in Baltimore.

“Then you take a step back and say, 'OK, this is going to be run by John Haley,' who's got a tremendous track record of integrating what I would say in many cases are more complicated acquisitions,” like that of Towers Perrin, referring to the 2009 merger of Towers, Perrin, Forster & Crosby Inc. and Watson Wyatt Worldwide, said Mr. Shields. “He's done phenomenally well with that.”

“It was viewed as better for Willis than Towers Watson shareholders, and that's why the stock price blipped the way it did,” said John L. Ward, CEO of Cincinnatus Partners L.L.C. in Loveland, Ohio.

Now, however, shareholders appear to be giving the deal more consideration.

“I think people are starting to say, 'OK, there's no immediate payout in terms of the way the deal is structured, but this is a management team that has certainly earned some trust in terms of how it deals with integration',” said Mr. Shields.

“I think as the market understands the deal a little bit better there won't be that kind of whiplash reaction,” Mr. Ward said.

“Over time I think you've got a very good argument and game plan, and it comes down to execution,” Mr. Shields said.