Stakeholders who own millions of shares in Towers Watson & Co. are planning to vote against the firm’s $8.7 billion merger with Willis Group Holdings Plc if the terms of the transactions are not improved, people with knowledge of the matter said.

Investor Driehaus Capital Management LLC, which owns more than 1 million Towers Watson shares, wrote a second letter filed to the Securities Exchange Commission on Thursday saying it expects the deal will be voted down. Another shareholder who owns more than 2 percent of Towers Watson plans to vote against the merger, a person said, asking not to be identified as the matter is private.

Willis, the third-largest insurance broker, agreed in June to merge with Towers Watson to add consulting operations and help take on larger rivals. Towers Watson’s stock has since slumped about 13 percent. Under the current terms, Willis investors will own 50.1 percent of the combined company while Towers Watson holders will get 2.649 Willis shares and a one- time cash dividend of $4.87 for each share they own.

At least two investors are also considering voting against the board’s re-election because it believes the deal is not in the best interest of shareholders, the people said. A date for the vote has yet to be decided. Driehaus’s letter warned that the investor would take “whatever actions necessary” to ensure a formal auction process is conducted.

Towers Watson’s View

“We remain confident in the significant value-creation potential” of a deal, Towers Watson said in a statement. “We strongly believe the Willis-Towers Watson merger is in the best interest of all shareholders and remain committed to completing the transaction.”

Should the deal be approved, Willis Chairman James McCann and Towers Watson Chief Executive Officer John Haley will lead the combined group. The investors are unhappy with Haley’s decision to sell more than 100,000 shares in March, the people said.

–With assistance from Sonali Basak in New York.

Topics Mergers & Acquisitions