Business Context and Reporting Period
This Form 8-K filing by Willis Group Holdings Public Limited Company (Willis) reports on events occurring on November 19 and November 20, 2015. The filing concerns the proposed merger between Willis and Towers Watson & Co. (Towers Watson), originally announced on June 29, 2015. The primary focus is the execution of Amendment No. 1 to the Merger Agreement and the subsequent adjournment of the Willis Extraordinary General Meeting (EGM) to allow shareholders additional time to consider the revised terms.
Key Financial Metrics and Transaction Terms
The filing does not report standard operating financial metrics such as revenue, profit, or cash flow for a specific fiscal period. Instead, it details specific financial adjustments to the merger agreement:
- Special Dividend Increase: The pre-merger special dividend to be paid by Towers Watson was increased from $4.87 per share to $10.00 per share of Towers Watson common stock.
- Termination Fee Adjustments:
- Willis's obligation to reimburse Towers Watson's fees and expenses (up to $45,000,000) in the event of termination due to Willis shareholder disapproval was eliminated.
- Towers Watson is now required to pay Willis $60,000,000 in cash for out-of-pocket fees and expenses if the merger is terminated due to Towers Watson shareholder disapproval, Willis shareholder disapproval, or a breach by Towers Watson.
Material Changes Versus Prior Period
The material changes reported in this filing relate exclusively to the restructuring of the merger agreement terms compared to the original June 29, 2015 agreement:
- Dividend Modification: A significant increase in the special dividend amount offered to Towers Watson shareholders.
- Fee Liability Shift: A reallocation of termination costs, removing Willis's liability for certain fees and imposing a $60 million cash payment obligation on Towers Watson under specific termination scenarios.
- Schedule Change: The shareholder meetings originally scheduled for November 18, 2015, and adjourned to November 20, 2015, were further adjourned to a date to be agreed upon, no later than December 16, 2015.
Guidance, Outlook, and Risks
Management Commentary and Outlook: Management has adjourned the shareholder meetings to provide additional time for shareholders to consider the amended proposals. The meetings are scheduled to reconvene on December 11, 2015, with provisions to further adjourn for an additional 30 days if necessary to obtain approval.
Risks and Contingencies: The filing highlights several risks that could prevent the transaction from closing:
- Failure to obtain necessary governmental approvals.
- Failure of shareholders of either Willis or Towers Watson to approve the transaction.
- Risks related to business integration and the realization of anticipated cost savings and synergies.
- Impact on relationships with employees, suppliers, customers, and competitors.
- Changes in general economic, business, and political conditions.
Unusual Items: The filing notes that ValueAct Capital, a beneficial owner of approximately 10.3% of Willis ordinary shares, entered into an amendment to its Voting Agreement to align with the new Merger Agreement terms.
Important Facts for Investor Verification
- Verify the final date and time for the reconvened Willis EGM, currently set for December 11, 2015, at The Conrad New York Hotel.
- Confirm the voting results of the November 20, 2015 meeting, where 151,702,499 votes were cast in favor of adjournment versus 9,824,442 against.
- Review the full text of Amendment No. 1 to the Merger Agreement (Exhibit 2.1) for complete details on the $10.00 dividend and $60 million termination fee.
- Monitor the joint proxy statement/prospectus filed on Form S-4 for comprehensive risk factors and transaction details.
- Track the status of shareholder approvals from both Willis and Towers Watson, as the transaction is contingent upon these votes.