NU Online News Service, Nov. 19, 10:47 a.m. EST

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Willis Group Holdings Limited and family shareholders of Frenchinsurance broker Gras Savoye & Cie, said they have an agreementfor Astorg Partners to take a third interest in Gras Savoye.

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The leveraged transaction announced today with the privateequity fund, will reorganize the capital of Gras Savoye and Willissaid part of the deal should provide it with $160 million to paydown debt.

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Gras Savoye has been an Associate company of Willis brokeragesince 1997 when Willis acquired a 33 percent ownership interest.Since then, Willis has gradually increased its shareholding to 48.6percent of voting rights (46.2 percent of outstanding shares). Thefamily shareholders and management currently own 51.4 percent ofthe voting shares of Gras Savoye.

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"Willis looks forward to building on the strong and valuablerelationship we have established with Gras Savoye over the past 12years, and we remain fully committed to our partnership," said JoePlumeri, Willis Group chairman and chief executive officer in astatement.

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"This new arrangement enhances Willis' financial flexibility,while at the same time, engaging an important new strategic partnerin its Gras Savoye investment."

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Patrick Lucas, who will continue to head Gras Savoye as chairmanand CEO, said the new ownership structure will allow everyone atGras Savoye "to be connected even more closely with the success ofour business."

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Mr. Lucas added that, "As we pursue our strategy, we willcontinue to focus on serving our clients with the highestprofessional standards and further strengthening our strategicpartnership with Willis to deliver the best global insurance andrisk management services around the world."

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Willis said under the terms of the transaction Astorg Partnerswill acquire 33.3 percent of the voting rights (31.8 percent ofoutstanding shares) of a new holding company while Willis and thefamily shareholders will sell part of their stakes in Gras Savoyeto Astorg Partners and roll over their remaining shares into thenew holding company, through a combination of equity, convertibledebt and seller financing.

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Willis, the family shareholders of Gras Savoye, and Astorg willhold equal stakes of 31.8 percent in the new holding company andhave equal representation of 33.3 percent of the voting rights onits Board. The remaining 4.5 percent will be held by a large poolof Gras Savoye managers.

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This transaction values Willis' existing investment in GrasSavoye at approximately $343 million. Willis will roll overapproximately $135 million in equity and convertible debt and lendapproximately $48 million to the new holding company at a rate of 6percent per annum.

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Willis said it expects to generate approximately $160 million oftax-free net cash proceeds from the transaction, which it will useto pay down existing debt.

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The agreement also gives Willis the option to purchase 100percent of the capital in the new holding company in 2015, shouldit choose to do so, with notification in 2014.

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An existing put option, which gave family shareholders an optionto sell their shares in Gras Savoye to Willis between now and 2011,will be cancelled at the closing of the transaction. Thetransaction is expected to close in the fourth quarter of 2009,subject to customary approvals and completion of financing.

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Christian Couturier, a Partner at Paris-based Astorg Partners,noted that "the leadership of Patrick Lucas, the personalinvestment of a large number of Gras Savoye managers and employees,the support of Willis, as well as Astorg's track record as aproactive shareholder in family companies, create the conditionsfor success in the next five years."

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Gras Savoye is the largest insurance broker in France and theninth largest broker globally. The Group has 3,650 employees, 105offices in 36 countries with a focus on France (with the largestregional network of insurance brokers), Europe, Africa, Middle-Eastand South East Asia, Willis said.

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