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June 29, 2009 5:32 PM

Milbank, Gibson on $3.5 Billion Consultant Merger

Posted by Zach Lowe

In a rare public-private merger of equals, Towers, Perrin, Foster & Crosby struck a deal to join forces with rival Watson Wyatt Worldwide to create what is believed to the largest HR consultancy in the world, according to Reuters and Bloomberg.

Gibson, Dunn & Crutcher advised Watson Wyatt on the deal. Milbank, Tweed, Hadley & McCoy, represented Towers, led by partner Charles Conroy.

The deal involved unique challenges, Conroy says, because it's rare for such a large public and private company to merge. (The companies have a combined annual revenue of about $3 billion, and Watson has earned about $1.7 billion in each of the last two fiscal years, according to Bloomberg.)

In this case, Towers, a private HR consultancy based in Stamford, Conn., comes to the table with 750 private shareholders, each of whom, due to their position and experience, is entitled to a specific level of stock in the new company. (Under the terms of the all-stock deal, the combined company will be a publicly traded entity whose stock will be split equally among Watson shareholders and Towers employees, according to Bloomberg.) 

The two sides also negotiated an agreement to set aside $200 million for Towers employees who may retire shortly after the deal is completed. That, too, is unusual, Conroy says. The two companies expect to conduct layoffs and streamline operations once the merger is complete, according to Bloomberg and Reuters. 

Stephen Glover, the lead Gibson partner on the deal, could not comment on specifics but says Gibson has been advising Watson on corporate matters since the company's initial public offering in 2000. Other Milbank partners involved in the deal include: Roland Hlwaty, Arnold Peinado III, Paul Wessel and Russell Kestenbaum. 

Also on the deal for Gibson were securities partners Brian Lane, Ronald Mueller and James Moloney; tax partner Arthur Pasternak; antitrust partners Sean Royall and Joshua Lipton; finance partner Linda Curtis; benefits partner Michael Collins; and corporate partner Stephanie Tsacoumis. 

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