Towers Watson (TW) to Acquire Extend Health in $435M Deal

Towers Watson (NYSE: TW), has signed an agreement to acquire Extend Health, Inc., which operates the largest private Medicare exchange in the United States. We believe that this combination of two market leaders will provide innovative, best-in-class health care solutions that combine specialized retiree medical transition consulting with the choice and cost advantages of individual Medicare plans purchased on a private exchange. The two organizations announced a strategic alliance last August.

The purchase price is $435 million, less net debt and certain transaction costs. We anticipate the acquisition will be dilutive to Adjusted EPS by 2% or less in year one, and then slightly accretive in year two.

The transaction is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in less than 60 days.

BofA Merrill Lynch is acting as financial advisor and Cadwalader, Wickersham & Taft LLP as legal advisor to Towers Watson. Morgan Stanley is acting as financial advisor and Wilson Sonsini Goodrich & Rosati as legal advisor to Extend Health.

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