Willis Towers Watson’s Chief Executive Officer (CEO), John Haley, has told the Financial Times he is considering taking on new deals, three years after an $18 billion merger created the Company.
It was in 2015 that Willis merged with Towers Watson and came shortly after Willis had purchased French broker Gras Savoye.
Haley told the FT that, “for the first two or three years you can’t really contemplate other acquisitions. We were really bringing together three organisations. We had a lot of work to do.”
That process is now complete, according to Haley, and the time has come to weigh up potential targets.
The FT reports that any acquisitions would be in areas or services adjacent to where WTW already operate and that there were no geographic holes Haley would be looking to fill.
Haley explained, “When we scan the horizon, we could acquire someone in any of the areas that we’re [already] in.”
Any potential deals would be weighed up against WTW’s alternative option of using spare finances to buy back shares, says the FT.
The Company has already bought back $1.1 billion of shares since the merger, and intend to acquire between $600 – $800 million more this year.
Haley commented, “at the moment we feel our stock is undervalued.”
The FT report shares in WTW have trailed those of rivals Aon and Marsh & Mclennan since its merger, with the Company trading on 15 times forecast earnings according to S&P Global Market Intelligence.
Cost savings from the Willis/Towers Watson merger is estimated at $175 million, higher than its initial $100-$125 million approximate.
The FT indicate that the suggested cross-selling benefits of $375 – $675 million have been harder to achieve, with sales of WTW’s health services to Willis clients coming in at the lower end of the expected range. Selling Willis’ insurance services to large Towers Watson clients in the U.S. has also proven difficult.
Haley estimates overall cross-selling benefits to be in-line with the bottom end of the suggested range at approximately $375 million by the end of 2018.
The FT concludes by underlining the increasing regulatory scrutiny on the industry which frames Haley’s interest in new deals. Adding that, In the UK, the competition watchdog is looking into whether investment consultants do a good job for their clients.
