Towers Watson & Co. postponed once again a scheduled vote on its proposed merger with Willis Group Holdings, sweetening its special dividend to $10 from $4.87 a share to attract enough shareholder support to complete the deal.
The special meeting, originally set for Wednesday and then postponed until Friday because of the lack of support, is now rescheduled for Dec. 11 “to allow stockholders additional time to evaluate the amended merger agreement, which was unanimously approved by the Towers Watson board” on Thursday and which raised the one-time special dividend, the company said in a news release Friday.
Driehaus Capital Management criticized the enhanced price, saying in a letter to other Towers Watson shareholders: “This is a step in the right direction, but the offer is still too low and closes neither the valuation gap nor the merger-of-equals price gap.
“A true merger of equals would dictate a special dividend of $17.72. In the interests of all involved, we urge Willis Group Holdings to put its best and final offer on the table,” said the letter by K.C. Nelson, portfolio manager, alternative strategies, and Matthew Schoenfeld, assistant portfolio manager.
Driehaus already announced its plans to vote its 1,175,113 Towers Watson shares, amounting to 1.5% of the company, against the merger and has been asking other shareholders to oppose the deal, according to the investment management firm’s filings with the Securities and Exchange Commission.
“We reached out to management before,” Mr. Schoenfeld said in an interview. “But they have not wanted to speak to dissidents.”
Except for the increased special dividend, the initial terms of the merger proposal remain the same with shareholders receiving for each Towers Watson share 2.649 Willis shares.
BlackRock Inc. and Vanguard Group are Towers Watson’s largest shareholders, holding 6.6% and 6.1% of the shares, respectively.
Harris Associates is the largest Willis shareholder with 11.3% of the shares.
Ed Sweeney, BlackRock corporate communications-director, said company officials don’t comment on voting. Kimberly H. Glennon, Harris investor communications specialist, couldn’t be reached for comment. David Hoffman, Vanguard spokesman, said the company’s policy is not to discuss how it will vote.
ValueAct Capital Management, which owns 475,000 Towers Watson shares and 18.4 million, or 10.2%, of Willis’ shares, entered into a voting agreement with Towers Watson to vote in favor of the merger. Towers Watson has 69.2 million shares outstanding.
The $188 billion California State Teachers’ Retirement System, West Sacramento, and the $175.6 billion Florida State Board of Administration, Tallahassee, will vote against the merger proposal, while the C$272.9 billion ($204.8 billion) Canada Pension Plan Investment Board, Toronto, plans to vote in favor of the proposed merger, according to their proxy-voting disclosures.
The merger proposal requires only Towers Watson shareholder approval.
In midday trading Friday, Towers Watson stock was priced at $132.13 a share, while Willis stock was priced at $45.54 a share. The midday price implies a $130.63 value to Towers Watson shareholders for the combined equity part and increased special dividend of the Willis merger deal, amounting to a 1.1% discount from the midday Towers Watson share price.
