Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

In M&A, just like in property auctions, "best and final" offers are traditionally made by the buyer.

Instead it was Towers Watson, the consulting firm that is effectively being acquired by Willis Group in a "merger of equals," that urged shareholders to vote in favor of the transaction, saying Friday: "The terms of the revised agreement with Willis represent the best and final offer for Towers Watson stockholders."

What seller willingly puts a lid on the price? 

Towers Watson's stock stood at $127.20 on Wednesday afternoon, just below Willis' sweetened stock-and-dividend offer, after months of trading above it. Some shareholders believe there's more to be squeezed from Willis if they vote "no" at the end of the week because a deal makes enough sense for the insurance broker to justify paying more. 

Taking Stock
Comparative stock performance shows Willis shareholders were supportive of the special dividend hike.
Source: Bloomberg

Voting "no" has also been recommended by proxy advisers ISS and Glass Lewis, both of which believe the new offer -- which lifted the dividend to $10 from $4.87 -- is insufficient. ISS crunched the numbers and reckons that Willis should have raised the cash dividend to $13.44 or $15.92, based on other large mergers-of-equals.  It added that the amended terms "feel more like a `wouldja take it' than a well-thought out response." 

Separately Driehaus Capital, which owns 1.7 percent of Towers Watson, said that figure should be $17.72 when it criticized Willis for not bumping its bid enough last month and urged the company "to put its best and final offer on the table."  

But if Driehaus and Towers Watson's other shareholders are feeling shortchanged, it's in part due to Towers Watson's chief executive John Haley, who is set to lead the combined company and drew scrutiny for selling shares before the deal. According to a regulatory filing, it was Mr. Haley who said an increase in the special dividend of "at least $10 per share would be necessary." When going to bat for his team, shouldn't he have swung for the fences and worked back from there? ISS said in its original recommendation that given the credit profile of the combined company, there was ample room to lift the dividend to $20 per share. 

Over and Out
Willis-Towers Watson could join the pile of this year's terminated deals.
Source: Bloomberg

With less than 48 hours left to vote, it's now crunch time. Amid the current M&A boom, it's rare for shareholders to shoot down a deal without having another buyer waiting in the wings. But it might be the right move. Another dividend bump could be en route because at least Willis hasn't made the claim its offer is "best and final." 


This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Gillian Tan in New York at

To contact the editor responsible for this story:
Beth Williams at