Businesshala News Exclusive | Activists Starboard, Elliott Have Taken Stakes in Willis Towers Watson

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The move comes at a time when the insurance broker is trying to recover from the fallout of its planned merger with AON Plc.

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With a market value of approximately $30 billion, Willis Towers is one of the largest firms in the world that helps companies buy insurance and advise on risk management. It had previously been betting on a $30 billion merger with AON to save cost and increase revenue, but antitrust protests from the Justice Department prompted the companies to scrap the deal in July.

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Willis Towers detailed plans at an Investor Day in September to buy back stock, cut costs and increase revenue. The company has said it plans to buy back more than $4 billion worth of stock by the end of next year to boost its stock price, which is well off its recent highs in May.

The Ireland-based, US-listed company Arthur J. It is set to earn up to $4 billion from a deal to sell its reinsurance business to Gallagher & Co.

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Willis Towers aims to reduce costs by $300 million over the next three years and increase revenue to more than $10 billion by the end of 2024, up from $9.35 billion in 2020.

Some said these steps have encouraged activists, but they are adopting a wait-and-see approach to see how they are carried out.

If the Aon deal goes through, only a few of Willis Towers’ nine directors were expected to join the combined company’s board, and workers could push for the company to replace those who had left.

Concurrent activist Glenview Capital Management LLC also owns a position in Willis Towers Watson, according to a letter written Thursday by the Wall Street Journal to its investors. The New York hedge fund wrote that the stock is undervalued and is likely to improve as the company executes its plan or attracts the attention of more investors, possibly including activists who call for more drastic changes. can apply pressure.

“We are pursuing and executing our ‘Grow, Simplify, Transform’ strategy to accelerate our performance and unlock shareholder value,” a Willis Towers spokesperson said in an emailed statement.

The deal with AON, first announced in March 2020, will see annual cost savings of $800 million and more through the sale of new products to help customers manage risks in areas such as climate change and intellectual property. Promised to increase revenue.

Willis Towers stock fell 19% between the time America first announced plans to block the deal in June and the companies’ decision to end the tie-up. The stock has since recovered, but still trades below where it was before the Justice Department made its protest public.

The company said in August that Willis Towers veteran Carl Hess would take over as chief executive in January, replacing John Haley, who was to become executive chairman of the merged company. Mr. Hayes is heading the investment, risk and reinsurance business segment of Willis Towers. Had the deal worked out, AON CEO Greg Case was to retain that role in the combined company.

Starboard and Elliott are two of the most dangerous activist hedge funds with a history of publicly targeting companies ranging from AT&T. Inc.

to Bristol-Myers Squibbo Co.

But both have revamped their tactics in recent years, and often prefer to be behind the scenes. They have met each other before, including in 2019, when they both took positions at eBay Inc.

And the online-auction prompted the company to sell off some of its non-core businesses, which it agreed not to do for a long time.

Ben Dummett at [email protected] and Cara Lombardo at [email protected]

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