Willis Towers Watson in the mood for deals again

27 June 2018 Authored by Consulting.us

In conversation with the Financial Times, Willis Towers Watson CEO John Haley stated that the insurance, risk management, and HR advisory firm will be looking to start acquiring firms again – three years after the huge merger that formed the company. The firm will look to acquire companies in its areas of expertise, as well as in ‘adjacent’ fields.

Based out of London, Willis Towers Watson is a global advisory, risk management, and insurance broking firm. The organization has over 40,000 employees serving more than 140 countries. Willis Towers Watson was created by the mammoth 2015 merger of equals between Arlington, VA-based Towers Watson – a risk management and HR advisory firm – and Willis, a London-based risk advisory and insurance/reinsurance brokerage firm. The deal, which was worth $18 billion, took place shortly after Willis acquired all of French broker Gras Savoye and 85% of London insurance broker Miller.

Now, three years after getting settled and integrating the merged firms together, Willis Towers Watson is ready to get back into the mergers and acquisitions (M&A) arena. “For the first two or three years you can’t really contemplate other acquisitions,” said CEO John Haley in an interview with the Financial Times. “We were really bringing together three organizations. We had a lot of work to do.”Willis Towers Watson in the mood for deals againHaley said there were no specific geographical ‘holes’ that needed to be filled, but that the firm was open to acquiring firms in their current areas of expertise, as well as in ‘adjacent’ service areas. The Willis Towers Watson CEO said acquisitions would be measured against buying back company shares, which he feels are currently undervalued. Since the merger, the firm has bought back $1.1 billion of its shares, and intends to buy back up to $800 million this year.

Meanwhile, Willis Towers Watson reported that it has outstripped its starting estimate of $100-$125 million in cost savings from merger, with expected synergies reaching $175 million.

However, expected cross-selling benefits of the merger – such as selling Towers Watson’s HR services to Willis clients and Willis’ brokering services to Towers Watson clients – will come in at the absolute low end of initial estimates, at $375 million rather than the top-end level of $675 million.

The two constituent firms of Willis Towers Watson had a rich history of M&A prior to their massive merger. Towers Watson was itself formed by the 2010 merger of equals between Towers Perrin and Watson, two large HR and financial consulting firms. In 2012, Towers Watson acquired Extend Health to enter the US private healthcare exchange market. Aside from its 2015 acquisitions of Gras Savoye and Miller, Willis made a huge $2.1 billion acquisition of insurance firm Hilb Rogal & Hobbs seven years earlier in 2008.

In recent Willis Towers Watson news, the firm announced that it has partnered with IBM to expand its cybersecurity offerings. The firm will integrate IBM Security’s service suite – security testing, cyber resiliency services etc. – into its own cyber risk consulting offering. The partnership will aim to create a stronger and more ‘holistic’ cyber risk solution.

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