(Bloomberg) — Towers Watson & Co. (NYSE:TW) investors should reject a planned merger with insurance broker Willis Group Holdings PLC, proxy advisers Institutional Shareholder Services and Glass Lewis & Co. said.
The consulting firm’s holders should seek improved merger terms, or “the better option at this time is to remain a standalone company,” Glass Lewis said in its report late Thursday. Shares of Towers Watson had dropped when the deal was announced in June.
Both companies’ investors are scheduled to vote on the deal Nov. 18. Willis agreed to merge with Towers Watson in an $8.7 billion transaction to add consulting operations, helping it compete against diversified insurance-broker rivals Aon PLC (NYSE:AON) and Marsh & McLennan Cos. (NYSE:MMC). Willis investors would own 50.1 percent of the combined company, to be domiciled in Ireland and led by Towers Watson CEO John Haley. Towers Watson holders would get 2.649 Willis shares and a one-time cash dividend of $4.87 for each share they own.
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“Although Towers shareholders might be willing to forgo a premium in exchange for the potential benefits of this transaction, the magnitude of the discount they are being asked to accept appears excessive,” ISS said in its report.