Global re/insurance brokerage Willis Towers Watson (WTW) has announced its acquisition of TRANZACT, a direct-to-consumer healthcare organisation, for $1.2 billion.
WTW hopes the deal will accelerate its direct-to-consumer strategy and ability to target the 50 million strong Medicare market.
TRANZACT will operate as an integral part of WTW’s Benefits Delivery and Administration (BDA) business, which focuses on the development and delivery of administrative solutions for employers, employees and retirees.
“We are delighted to announce the acquisition of TRANZACT which represents a significant growth opportunity in the direct-to-consumer U.S. health care space and speaks to Willis Towers Watson’s renewed focus on strategic M&A opportunities,” said John Haley, Chief Executive Officer of Willis Towers Watson.”
“This deal will accelerate our direct-to-consumer strategy and help create an end-to-end consumer acquisition platform.”
David Graf, CEO of TRANZACT, noted, “We believe joining our complementary strengths and strategies will greatly benefit TRANZACT’s carriers and consumers.”
“The powerful combination of our technology-driven, direct-to-consumer solutions and Willis Towers Watson’s scale, leading infrastructure and participant engagement capabilities creates a unique and differentiated capability in the marketplace.”
TRANZACT combines digital marketing, sales and data science expertise to connect individuals to leading US insurance carriers.
The company currently markets a wide range of products including Medicare Advantage, Medicare Supplement, Prescription Drug Plan (PDP) and an array of ancillary products including dental, vision, life and indemnity.
“Under a strong leadership team, TRANZACT has built a world class lead generation capability underpinned by cutting edge technology and analytics,” added Russ Fradin, CD&R Operating Partner and Chairman of TRANZACT.
“We see a bright future for TRANZACT and its valued consumers as part of Willis Towers Watson. The CD&R team looks forward to working closely with Willis Towers Watson to help with integration and growth through 2020.”
The total purchase price is $1.2 billion in closing consideration, with an additional potential earn-out of up to $200 million payable in either cash or stock in 2021 if certain financial targets are achieved.
The total purchase price includes $1.1 billion of cash consideration and $100 million of cash or stock consideration payable at close. Upon closing, the transaction is expected to be immediately accretive to Willis Towers Watson on an adjusted earnings per share basis.
Gene Wickes, Head of Willis Towers Watson’s BDA segment, said, “Reaching consumers directly will significantly advance our overall growth strategy.”
“Willis Towers Watson will now have access to an additional 35 million retirees and growing through direct-to-consumer channels and will be able to serve a diverse market that is growing at approximately 10,000 lives per day.”