GLOBAL - Pensions and investment consultancy giants Towers Perrin and Watson Wyatt have announced plans to merge their operation, in a deal which values the combined operation at $3.5bn (€2.48bn).

A statement issued late yesterday said the boards of Towers Perrin, Forster & Crosby Inc and Watson Wyatt Worldwide have unanimously agreed to create a new listed company called Towers Watson & Co.

Watson Wyatt's chief executive, John Haley, will serve as executive chairman of the new firm while Mark Mactas, chief executive of Towers Perrin, will become president.

The combined firms say they expect to earn revenue of $3bn a year but create $80m in pretax savings under the new structure after three years.

Towers Watson will continue to operate in what they describe as three key business areas: benefits, talent and rewards, and risk and financial services and argues the merger will provide "broader solutions and a deeper talent pool across a wider geographical footprint" as it operates in North America, EMEA, Asia-Pacific and Latin America.

Watson Wyatt shareholder will receive 50% of the new firm while Towers Perrin shareholders, as well as some employees who receive equity incentives, will gain the other 50%.

Both firms have significant operations in Europe, serving pension fund and associated clients.

This latest development follows only months after US consulting giant Callan Associates pulled out a deal to merge with rival adviser firm Mercer. (See earlier IPE story: Mercer and Callan merger is off).

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