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U.S. consultants Towers Perrin, Watson Wyatt to merge
NEW YORK |
NEW YORK (Reuters) - Management consulting firms Towers Perrin Forster & Crosby Inc and Watson Wyatt Worldwide Inc WW.N on Sunday announced an agreement to merge into a new publicly-traded company that will expand their global reach.
The deal, valued at about $3.5 billion, will hand Watson Wyatt shareholders 50 percent of shares on a diluted basis in the new firm, called Towers Watson & Co.
Towers Perrin shareholders and some of its employees are entitled to the other 50 percent of shares, though on a restricted basis, the companies said in a statement.
Towers Watson & Co's board will have 12 members with each company designating six, according to a spokesman.
A new location for the combined companies' headquarters has not been finalized, he added. Currently, Watson Wyatt's headquarters are in Arlington, Virginia while Towers Perrin makes its headquarters in Stamford, Connecticut.
Watson Wyatt Chief Executive John Haley will be the new company's CEO, while Towers Perrin CEO Mark Mactas will serve as its president, the statement said.
Annual revenue for the new Towers Watson is seen at more than $3 billion and the company said it expects about $80 million in annual pretax synergies.
"Full realization of synergies" will take three years and cost about $80 million, according to the statement.
Towers Watson will also have significant noncash expenses during the first two years after the transaction is completed, the companies said. The transaction is expected to add to diluted per-share earnings within three years following the consummation of the deal.
The global economic slump has taken a toll on firms that provide human resource and consultancy services, as clients put off projects or cancel certain services seen as non-essential.
Watson Wyatt's CEO earlier said he did not think that an economic recovery "is going to really kick in certainly" before the end of 2009 or early in 2010, and as a result, the company would curb its corporate spending.
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