(Reuters) Insurance broker Willis Group Holdings (WSH.N) said it would combine with financial services provider Towers Watson & Co (TW.O) to create a new $18 billion insurance, personnel and risk company.
Willis shareholders will own 50.1 percent of the new Ireland-based company, Willis Towers Watson, which the companies said would have annual revenue of about $8.2 billion and 39,000 staff in 120 countries.
The merger is expected to deliver cost savings of up to $125 million within three years of the deal closing, the companies said in a statement.
The combined company would use Willis’ global insurance broking network to deliver new products to clients, said John Haley, the chief executive of Towers Watson, who will head the new company.
Towers Watson is known primarily for its risk management and human resource consulting services.
The new company will advise more than 80 percent of the world’s top-1,000 companies, said Willis Group CEO Dominic Casserley, who will be president and deputy CEO after the merger.
Willis Group shares closed at $45.40 on the New York Stock Exchange on Monday, while Towers Watson closed at $137.98 on the Nasdaq.
In the all-stock deal, Towers Watson shareholders will receive 2.6490 Willis shares for each share owned and a one-time cash dividend of $4.87 per share.
ValueAct Capital Management, which owns 10.3 percent of Willis, has agreed to vote in favor of the deal.
Perella Weinberg Partners LP advised Willis, while BofA Merrill Lynch advised Towers Watson.
Weil, Gotshal & Manges LLP and Matheson are legal advisers for Willis and Gibson, Dunn & Crutcher served as legal advisers for Towers Watson.
(Reporting by Rama Venkat Raman in Bengaluru; Editing by Rodney Joyce and Gopakumar Warrier)