Filed by Towers Watson & Co.
Pursuant to Rule 425 under the
Securities Act of 1933, as amended,
and deemed filed pursuant to Rule 14a-6(b)
of the Securities Exchange Act of 1934, as amended
Subject Company:
Towers Watson & Co. (Commission File No. 001-34594)
The following is a slide presentation made available on November 25, 2015 by Towers Watson & Co. (“Towers Watson”) regarding the proposed merger of Towers Watson and Willis Group Holdings plc.
 1 Investor Presentation Update: Revised Terms for Merger with Willis Group Holdings November 25, 2015 |
 2 Overview of the Enhanced Towers Watson + Willis Transaction Terms On November 19, 2015, Towers Watson and Willis announced revised terms for the merger transaction,
providing enhanced liquidity and value to Towers Watson shareholders
Towers Watson shareholders will receive a special dividend of $10.00 per share
(up from $4.87 per share) Towers Watson shareholders will
continue to receive 2.649 Willis ordinary shares per TW share This
materially improves the consideration provided to Towers Watson shareholders Cash consideration is increased by $357MM in the aggregate, over 100% more than original terms
Total implied consideration has increased by $10.48 per share
1 , or +8.6%, based on the revised terms Towers Watson shareholders continue to receive upside in the form of 49.9% of the equity in the
combined company
The benefits to Towers Watson shareholders continue to be clear: This merger is the right deal with the right partner at the right time to drive significant shareholder value Unique opportunity to accelerate TW’s long-term growth strategy
Clear, compelling synergies expected to generate $4.7 billion of total
incremental value Significant cash net income accretion of
approximately 42% for TW shareholders by 2018 Right management
team in place to execute on the integration and strategic plan
Result of extensive evaluation and negotiation by an engaged, independent
board Exchange ratio is favorable to TW shareholders , with
enhanced value through additional cash
consideration
We urge shareholders to vote FOR
the revised transaction at our meeting on December 11, 2015
(1) Based on implied consideration at close of 11/24/15 of $132.68 (2.649 shares of WSH at $46.31 + $10.00 cash) and at close of 11/17/15 (the
day prior to adjournment) of $122.19 (2.649 shares of WSH at $44.29 + $4.87 cash) |
 3 $125.21 $122.19 $132.68 $5.13 $5.35 $110 $120 $130 $140 TW Stock Price 11/17/2015 Value of Consideration 11/17/2015 Value of Increase in Special Dividend Value of WSH Stock Appreciation Value of Consideration 11/24/2015 Revised Terms Have Generated Significant Value for TW Shareholders The revised terms provide incremental cash value to TW shareholders and have reduced
deal uncertainty, which has likely contributed to WSH stock price
appreciation Implied Merger Consideration of Revised
Terms +8.6% increase
vs. original terms
+6.0% increase
vs. stock price
(Immediately prior to adjournment) |
 Implied returns to TW (based on the value of consideration under the revised
terms) materially exceed peer
1 performance post-announcement (6/30 to present), offsetting the initial stock price reaction on a relative basis We believe that this outperformance has been driven by increased understanding of the strategic fit and value creation
potential of the transaction
If TW had traded in-line with average of peers since before announcement,
TW stock would be valued at $130.24 per share, vs. $132.68 per
share of consideration offered In addition to providing attractive
near-term value, this transaction will provide TW shareholders with exposure to significant upside over the long-term TW shareholders will hold 49.9% of the combined company, including exposure to $4.7 billion of expected total value
creation from cost savings, revenue synergies and tax benefits
We urge shareholders to not focus solely on trading at announcement
– for instance, there was an ~8% decline in stock
price upon announcement of the Towers Perrin / Watson Wyatt
transaction, which subsequently generated TW returns over 40% in
excess of peers post-transaction to date TW Has Outperformed Its
Peers Since Announcement (1)
Peers include Accenture, Advisory Board Company, Aon, The Corporate Executive
Board, FTI, Huron Consulting, and MMC (2)
Based on deal consideration of $132.68 as of market close on 11/24/15 vs. TW stock price on 6/29/15 and 6/30/15 (3) Market data per FactSet; represents stock price performance from indicated start date through November 24, 2015
Day Prior to Announcement
(6/29 to Present) (3) Day of Announcement to Present (6/30 to Present) (3) Average Return of TW Peers (1) (5.6%) (5.9%) Median Return of TW Peers (1) (5.3%) (4.9%) TW Returns Based on Deal Consideration (2) (3.8%) 5.5% vs. Peer Average +1.8% +11.4% vs. Median Average +1.5% +10.4% 4 |
 5 TW Board evaluated precedent MoE transactions to determine the range of reasonable premiums and discounts - In MoE transactions, “target” and “acquiror” generally reflect legal or structural, not substantive, elements - Following the merger, TW shareholders will have the majority of the economics (51.9% including the amended pre-merger dividend) - While Willis is the structural “acquiror,” there are aspects of the transaction where TW is gaining more than Willis (and accordingly is more akin to the “acquiror” in precedent deals), and therefore it is appropriate and consistent with such deals for Willis to receive a modest premium - The primary focus should be the absolute value of the premium provided to one partner and, conversely, the discount received by the other Precedent merger transactions resulted in average partner discount of 4.1% - Focusing solely on deals where nominal “targets” received a discount would be arbitrary and under inclusive MoEs Typically Involve a Moderate Premium/Discount to Partners (1) Calculated as combined unaffected market capitalization multiplied by ownership percentage divided by standalone pre-announcement
market capitalization less 1. Market Cap. Method
(1) Ann. 1-Day Premium Ownership Split Date Partner A Partner B Partner A Partner B Partner A Partner B 09/15/15 Sirona Dental Systems Dentsply International (0.6%) 0.4% 42.0% 58.0% 08/11/15 Terex Konecranes 9.3% (11.3%) 60.0% 40.0% 06/14/15 Ryland Group Standard Pacific 6.7% (4.2%) 41.0% 59.0% 01/26/15 MeadWestvaco RockTenn Company 8.9% (7.6%) 50.1% 49.9% 12/01/14 Spansion Inc. Cypress Semiconductor 8.8% (7.4%) 50.0% 50.0% 10/27/14 Wright Medical Tornier N.V. 10.8% (9.5%) 52.0% 48.0% 05/15/14 Dixons Retail plc Carphone Warehouse 2.3% (2.2%) 50.0% 50.0% 04/07/14 Lafarge S.A Holcim 1.5% (1.3%) 47.0% 53.0% 02/24/14 TriQuint Semiconductor RFD Micro Devices 5.4% (4.8%) 50.0% 50.0% 02/20/13 OfficeMax Office Depot 8.3% (5.9%) 45.0% 55.0% 08/21/12 SuperMedia Inc. Dex One Corp 3.0% (1.9%) 40.0% 60.0% 02/22/11 Frontier Oil Corp. Holly Corp. (1.8%) 1.8% 49.0% 51.0% 10/18/10 NSTAR Northeast Utilities 2.1% (1.6%) 44.0% 56.0% 05/03/10 Continental Airlines UAL Corp. (1.2%) 1.0% 45.0% 55.0% 03/23/10 FNX Mining Co. Quadra Mining Ltd. (2.5%) 2.5% 48.0% 52.0% 02/10/09 Ticketmaster Live Nation 5.7% (5.2%) 50.1% 49.9% 06/13/08 Allied Waste Industries Republic Services 2.3% (2.4%) 52.0% 48.0% 02/19/07 XM Satellite Radio SIRIUS Satellite Radio 10.9% (8.9%) 50.0% 50.0% 11/01/06 Caremark CVS 1.3% (1.1%) 45.5% 54.5% 03/09/05 Great Lakes Chemical Crompton Corp. 3.1% (2.8%) 49.0% 51.0% 07/22/04 Coors Molson (3.2%) 2.8% 45.0% 55.0% 01/22/04 Union Planters Regions Financial (1.5%) 1.1% 40.7% 59.3% Premium Discount Maximum 10.9% (11.3%) Mean 4.6% (4.1%) Median 2.9% (2.7%) Minimum 0.4% (0.6%) |
 Revised Terms Result in a Moderate Premium/Discount, In-Line with
Precedents
(1) TW stock price of $137.98 as of 6/29/2015 and diluted shares based on share count information as of 6/25/15, reflecting 69.213 million
shares of common stock outstanding, 0.730 million of common stock issuable with respect to restricted stock units (including RSUs issued due to special dividend), and by applying treasury stock method for 0.101 million
options outstanding with weighted average exercise price of $19.62.
(2) Willis stock price of $45.40 as of 6/29/2015 and diluted share count information reflecting 179.726 million ordinary shares outstanding,
3.418 million ordinary shares issuable with respect to restricted stock units and performance stock units, and by applying treasury stock method for 6.921 million options outstanding with weighted average exercise price
of $37.12. TW board determined the moderate premium/discount in the
transaction was reasonable in light of the long- term
anticipated value creation of the transaction - Premium/discount materially reduced under revised terms The Board reviewed the calculation of the premium/discount on a market capitalization basis
- Calculating the discount using the pre-deal Willis stock price does not reflect the total value received by TW
shareholders through their 49.9% ownership in the combined entity
6 Announcement TW Market Value (1) $9,663 Plus: WSH Market Value (2) 8,372 Combined Market Value $18,035 Less: Dividend to TW (694) Total Market Cap (Ex-Dividend) $17,341 Implied Market Value to TW (49.9%) $8,653 Plus: Dividend 694 Implied Value to TW $9,347 Implied Value to WSH (50.1%) $8,688 TW Implied Premium/(Discount) to Trading Value (3.3%) WSH Implied Premium/(Discount) to Trading Value 3.8% |
 7 Revised Terms Were the Result of Extensive Shareholder Outreach and Negotiation Between the Parties Since announcement of the transaction, management and independent directors have had extensive,
constructive discussions with our shareholders
While shareholders have been supportive of the strategic rationale and
long-term value creation potential of the transaction, some
shareholders indicated concerns regarding the value of consideration to be received in the transaction Given feedback from our shareholders, TW entered into negotiations with Willis to enhance the value
received by TW shareholders in the transaction:
The companies had multiple discussions leading up to the revised terms on November 19 TW advocated for additional value through an increase to the special dividend and/or
enhancements to the exchange ratio
Final increase of special dividend to $10.00 per share was the result of
extensive negotiation and dialogue
The TW Board considered a range of factors and considerations, including the
value to be received by TW shareholders, the negotiation process
resulting in the revised terms, and the concerns that a further
dividend increase could begin to jeopardize full realization of the merger tax
benefits The Board of TW unanimously approved the revised merger
terms, and believe that these terms both enhance near-term
value, as well as maintain the full long-term benefits of the transaction Towers Watson does not expect any further increase in the pre-merger special dividend and Willis has
stated it will not agree to any further amendments
th |
 8 Where You Can Find Additional Information In connection with the proposed merger of Towers Watson and Willis Group, Willis Group filed a registration statement on Form S-4
with the Securities and Exchange Commission (the
“Commission”) that contains a joint proxy statement/prospectus and other relevant documents concerning the proposed transaction. The registration statement on Form S-4 was declared effective by the Commission on October
13, 2015. Each of Towers Watson and Willis Group mailed the joint
proxy statement/prospectus to its respective shareholders on or around October 13, 2015. YOU ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND THE OTHER RELEVANT DOCUMENTS THAT HAVE BEEN OR
WILL BE FILED WITH THE COMMISSION AS THEY BECOME AVAILABLE
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT
TOWERS WATSON, WILLIS GROUP AND THE PROPOSED TRANSACTION. You may obtain the joint proxy statement/prospectus and the other documents filed with the Commission free of charge at the Commission’s website, www.sec.gov. In addition, you may obtain
free copies of the joint proxy statement/prospectus and the other
documents filed by Towers Watson and Willis Group with the Commission by requesting them in writing from Towers Watson, 901 N. Glebe Road, Arlington, VA 22203, Attention: Investor Relations, or by telephone at (703)
258-8000, or from Willis Group, Brookfield Place, 200 Liberty
Street, 7th Floor, New York, NY 10281-1003, Attention: Matt Rohrman, Investor Relations, or by telephone at (212)
915-8084. |
 9 Forward Looking Statements This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995. You can identify these statements and other
forward-looking statements in this document by words such as “may”, “will”, “would”, “expect”, “anticipate”, “believe”, “estimate”, “plan”, “intend”, “continue”, or similar
words, expressions or the negative of such terms or other
comparable terminology. These statements include, but are not limited to,
the benefits of the business combination transaction involving
Towers Watson and Willis Group, including the combined company’s future
financial and operating results, plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations
of Towers Watson’s and Willis Group’s management and
are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-looking
statements: the ability to obtain governmental approvals of
the transaction on the proposed terms and schedule; the failure of Towers Watson shareholders and Willis Group shareholders to approve the transaction; the failure of the transaction to close for any reason; the risk that the businesses will
not be integrated successfully; the risk that anticipated cost
savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; the potential impact of the announcement or consummation of the proposed transaction on relationships,
including with employees, suppliers, customers and competitors;
changes in general economic, business and political conditions, including changes in the financial markets; significant competition; compliance with extensive government regulation; the combined
company’s ability to make acquisitions and its ability to
integrate or manage such acquired businesses. Additional risks and factors are identified under “Risk Factors” in Towers Watson’s Annual Report on Form 10-K filed on August 14, 2015, which is on file with the Commission, and under
“Risk Factors” in the joint proxy statement/prospectus.
You should not rely upon forward-looking statements as predictions of future events because these statements are based on assumptions
that may not come true and are speculative by their nature.
Neither Towers Watson or Willis Group undertakes an obligation to update any of the forward-looking information included in this document, whether as a result of new information, future events, changed expectations or
otherwise. |