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Towers Watson Conflicts of Interest in Merger Class Action

This class action takes on a merger that took place January 4, 2016 between Towers Watson & Co. and Willis Group Holding plc, disclosing alleged actions and conflicts of interest that may have deprived Towers shareholders of their full interests. The concealment of these actions and interests, the complaint says, violates Sections 14(a) and 20(a) of the Securities Exchange Act of 1934.

The class for this action is all Towers shareholders of record as of October 2, 2015 who were harmed by the defendants’ actions.

Towers was a global consulting company that improved the performance of organizations through risk management, human resources, and actuarial and investment services. Willis, a London firm, was a risk advisor and insurance and reinsurance brokerage.

The merger grew out of talks between the CEOs of the two companies, John J. Haley of Towers and Dominic Casserley of Willis. The Merger Agreement announcement of June 30, 2015 specified that Towers stockholders would receive 2.649 shares of Willis and $4.87 in cash and would own 49.9% of the merged entity while Willis’s shareholders owned 50.1%.

The complaint claims that many Towers shareholders did not like the terms of the deal, and the shares fell 9%. The Towers board, seeing that it would not obtain majority approval, authorized Haley to renegotiate the terms.

At this point, the complaint alleges that Haley met with Jeffrey W. Ubben, CEO of ValueAct, the largest shareholder of Willis. With Ubben, he negotiated his own compensation package as CEO of the combined company. In exchange, the complaint claims, Haley agreed not to ask for a better exchange ratio for shareholders and to accept $5 per share increase in the cash offer.

The complaint claims that these negotiations were kept secret, with Towers claiming that Haley had negotiated with Casserley and Willis’s Chairman, James McCann. The only appearance of ValueAct in the filings with the Securities and Exchange Commission (SEC) is a mention that ValueAct signed a voting agreement supporting the merger.

A Proxy was filed on October 13, 2015, and the complaint claims that, while it did mention some conflicts of interest of Tower’s board, it did not mention Haley’s three-year, $165 million compensation deal.

On November 27, 2015, Towers and Willis filed a Proxy Update which included Haley’s negotiations, but the complaint says it falsely portrayed them as arm’s-length talks with Casserley. The Proxy Update claims that Casserley said that an increase in the exchange ratio would not be acceptable to Willis. The complaint claims that this is false both because it was Ubben he was negotiating with and because his own position and compensation were equal subjects of the negotiations.

The complaint asks the court to award compensatory damages to former Tower shareholders. 

Article Type: Lawsuit
Topic: Securities

Most Recent Case Event

Towers Watson Merger Proxy Hid Conflicts of Interest Complaint

November 21, 2017

This class action takes on a merger that took place January 4, 2016 between Towers Watson & Co. and Willis Group Holding plc, disclosing alleged actions and conflicts of interest that may have deprived Towers shareholders of their full interests. In short, when shareholders were dissatisfied with the first offer, the company’s CEO was tasked to renegotiate the deal, but gave more attention to negotiating his own compensation and position at the merged company. The concealment of his actions and conflicts of interest, the complaint says, violates Sections 14(a) and 20(a) of the Securities Exchange Act of 1934.

towers_merger_sec_compl.pdf

Case Event History

Towers Watson Merger Proxy Hid Conflicts of Interest Complaint

November 21, 2017

This class action takes on a merger that took place January 4, 2016 between Towers Watson & Co. and Willis Group Holding plc, disclosing alleged actions and conflicts of interest that may have deprived Towers shareholders of their full interests. In short, when shareholders were dissatisfied with the first offer, the company’s CEO was tasked to renegotiate the deal, but gave more attention to negotiating his own compensation and position at the merged company. The concealment of his actions and conflicts of interest, the complaint says, violates Sections 14(a) and 20(a) of the Securities Exchange Act of 1934.

towers_merger_sec_compl.pdf
Tags: Providing False or Misleading Information, Proxy Statement, Securities