29 June 2009
Towers Perrin and Watson Wyatt to merge
Merger will make Towers Watson & Co one of world's biggest professional services firms.
by James Bennett, Managing Online Editor, Melcrum
Management consulting firms Towers Perrin Forster & Crosby and Watson Wyatt Worldwide, well known for their return on investment work within internal communications, are merging into a new publicly-traded company in a £2.1bn deal aimed at expanding their global reach.
Both Towers Perrin and Watson Wyatt have produced a number of key internal communications and HR related surveys, reports and research.
The all-stock transaction, announced by the companies yesterday, would form a new group called Towers Watson & Co, whose shares would be divided equally between Watson Wyatt shareholders and shareholders in Towers Perrin.
Both Towers Perrin and Watson Wyatt have produced a number of key internal communications and HR related surveys, reports and research. Towers Perrin is well known in the internal communications industry for its work on employee engagement and its Engagement Index as well as its Communication Effectiveness Consortium that seeks ways in which to measure the effectiveness of internal communications.
In its latest research entitled Turbocharging employee engagement: The power of recognition from managers, it analyzed three years worth of employee data for 40 global companies within its database and found that during that timeframe, companies with a highly engaged employee population turned in significantly better financial performance (a 5.75% difference in operating margins and a 3.44% difference in net profit margins) than did low engagement workplaces.
Watson Wyatt Worldwide is also highly regarded for its work on determining the value of investing in internal communications. Last year a survey conducted by the firm found that companies with effective internal communications have a 19.4% higher market premium and deliver 57% higher shareholder return compared with organizations with less effective internal communications.
"Excellent" fit between both companines
“The combination will create one of the world’s leading professional services firms, well positioned for sustained growth and profitability across all geographies and business segments,” said John Haley, chief executive of Watson Wyatt who will also serve as the new chief executive.
Mark Mactas, chief executive of Towers Perrin, who will serve as group president, said the fit between the two companies was “excellent”.
The companies said they expect about $80m in pre-tax annual synergies. “While significant savings are expected during the first two years following completion of the transaction, it is anticipated that full realization of synergies will take three years and cost approximately $80m,’’ they said in a statement.
Towers Perrin, which specializes in people, risk and financial management, has 6,300 employees in 26 countries. Watson Wyatt, whose services include advising on employee benefit programs has 7,700 associates in 34 countries.
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