Cambridge (Mass.) Retirement System filed a class-action lawsuit against Willis Towers Watson and other defendants for allegedly violating provisions of the Exchange Act in connection to the merger between Towers Watson & Co. and Willis Group Holdings.
The suit alleges that defendants issued false and misleading statements in proxy materials filed with the U.S. Securities and Exchange Commission prior to the merger, which closed on Jan. 4, 2016.
On June 30, 2015, Towers Watson and Willis announced that they had agreed to merge. The merger required the approval of most Towers Watson shareholders.
Under the original terms of the merger, Towers Watson shareholders were to receive 2.649 shares of Willis Group stock and a $4.87 per share cash dividend in exchange for each Towers share. Also as part of the agreement, Towers shareholders would own 49.9% of the combined entity, with Willis shareholders owning the remaining majority.
The complaint alleges that, fearing that support for the merger was waning among its shareholders, Towers Watson's board authorized Chairman and CEO John J. Haley to renegotiate terms of the deal. "Rather than negotiate in the best interests of Towers shareholders, (Mr.) Haley conspired with Willis executives and a major Willis shareholder, ValueAct, and not negotiate to maximize the value of Towers shares," said a news release issued by Bernstein Litowitz Berger & Grossmann, the law firm representing Cambridge Retirement System.
The suit further alleges that the defendants frequently misrepresented terms of the deal to Towers Watson's shareholders to mislead them into accepting terms below fair value for their shares.
In addition to Willis Towers Watson, defendants in the class-action include Towers Watson & Co., Willis Group Holdings, ValueAct Capital Management, Mr. Haley, former Willis Group CEO Dominic Casserley and Jeffrey W. Ubben, ValueAct CEO and chief investment officer.
The action, filed in the U.S. District Court for the Eastern District of Virginia, asserts claims on behalf of all Towers Watson shareholders of record as of Oct. 2, 2015, the date for Towers shareholders to be eligible to vote on the merger.
Ellen K. Philbin, executive director of the $1.1 billion pension fund, could not be immediately reached for comment. A Willis Towers Watson spokesman declined to comment.