WSJ News Exclusive | Activists Starboard, Elliott Have Taken Stakes in Willis Towers Watson

With a market value of about $30 billion, Willis Towers is among the world’s largest firms that help companies buy insurance and advise them on risk management. It had previously been betting on a $30 billion merger with Aon to generate cost savings and boost revenue, but antitrust opposition from the Justice Department prompted the companies to scrap the deal in July.

Willis Towers detailed plans at an investor day in September to buy back stock, cut costs and boost revenue. The company has said it plans to buy back more than $4 billion worth of stock by the end of next year to boost its stock price, which is well off its recent highs in May.

The Ireland-based, U.S.-listed company is set to earn as much as $4 billion from a deal in August to sell its reinsurance business to

Arthur J. Gallagher

& Co.

Willis Towers is aiming to slash costs by $300 million over the next three years and boost revenue to more than $10 billion by the end of 2024, from $9.35 billion in 2020.

The activists are encouraged by these moves but are taking a wait-and-see approach on how they are executed, some of the people said.

Only a handful of Willis Towers’ nine directors were expected to join the board of the combined company had the Aon deal gone through, and the activists could push for the company to replace those who would have left.

Occasional activist Glenview Capital Management LLC also owns a position in Willis Towers Watson, according to a letter to its investors Thursday viewed by The Wall Street Journal. The New York hedge fund wrote that the stock is undervalued and likely to improve as the company executes its plan or attracts attention from more investors, possibly including activists who could push for more drastic changes.

“We are moving with urgency and executing our ‘grow, simplify, transform’ strategy to accelerate our performance and unlock shareholder value,” a Willis Towers spokesman said in an emailed statement that made no mention of the activists.

The deal with Aon, first announced in March 2020, promised to generate annual cost savings of $800 million and boost revenue through the sale of new products to help clients manage risks in areas such as climate change and intellectual property.

Willis Towers’ stock fell 19% between the time the U.S. first announced plans to block the deal in June and the companies’ decision to scrap the tie-up. The stock has since recovered but still trades below where it was before the Justice Department made its opposition public.

The company said in August that Willis Towers veteran

Carl Hess

would take over as chief executive in January, replacing

John Haley,

who was to become executive chairman of the merged company. Mr. Hess has been heading Willis Towers’ investment, risk and reinsurance business segment. Had the deal gone through, Aon CEO

Greg Case

was to maintain that role at the combined company.

Starboard and Elliott are two of the most feared activist hedge funds, with a history of publicly targeting companies ranging from

AT&T Inc.

to

Bristol-Myers Squibb Co.

But both have refined their tactics in recent years, more frequently choosing to stay behind the scenes. They have run into each other before, including in 2019 when both took positions in

eBay Inc.

and pushed the online-auction company to sell some of its noncore businesses, which it agreed to do not long after.

Write to Ben Dummett at [email protected] and Cara Lombardo at [email protected]