October 1, 2012

Towers Watson To Buy Extend Health In $435M Deal

DOW JONES NEWSWIRES

Towers Watson & Co. (TW) has agreed to acquire health-care insurance services provider Extend Health Inc. in a roughly $435 million deal that it expects will expand its retiree benefit business.

Extend Health, operator of a private Medicare exchange, will operate as a new business segment within Towers Watson. Called Exchange Solutions, the segment will have more than 300 employees and will be led by Bryce Williams, the co-founder and chief executive of Extend Health.

“The combination of Towers Watson benefits expertise and resources, and Extend Health’s proven infrastructure and scalable exchange platform, positions us well to meet the needs of employers and retirees now and in the future,” said John Haley, Towers Watson’s chief executive.

The acquisition is expected to lower adjusted per-share earnings by 2% or less in the first year, and boost earnings slightly thereafter. The deal is expected to close within 60 days.

Towers Watson has expanded through acquisitions since it was formed in 2010 by the merger of Watson Worldwide Inc. and Towers, Perrin, Forster & Crosby Inc. in 2010. The company has seen its revenue grow in recent quarters, though its first-quarter earnings were pressured by higher expenses and uncertainty in the European markets.

Shares closed at $65.77 on Friday and were inactive premarket. The stock is up 9.7% so far this year.

By Kristin Jones, Dow Jones Newswires; 212-416-2208; kristin.jones@dowjones.com