(Bloomberg) -- Willis Group Holdings Plc, the third-largestinsurance broker, agreed to better terms for Towers Watson &Co. shareholders in a proposed merger after the consulting firm’sinvestors said that a June agreement was inadequate.

The one-time cash dividend will be $10 a share, compared with$4.87 under the previous offer, Towers Watson said in a statementThursday. The latest agreement values the consulting firm at about$8.9 billion, based on Wednesday’s closing price for Willis.

The consulting firm had postponed a shareholder vote that wasscheduled for Nov. 18 amid opposition from some proxy- advisoryfirms and investors to the deal, which was valued at about $8.7billion when it was announced on June 30. Towers Watson shares fell8.8% that day, and investor Driehaus Capital Management LLC laterfaulted the accord as a “takeunder.” A vote on the new terms willoccur by Dec. 16, Arlington, Virginia-based Towers Watson said.

“Towers Watson shareholders are upset, and I can totallyunderstand that,” Darren Marcus, an analyst at MKM Partners, saidin a phone interview before the terms were changed. “With thatsaid, I think the deal, in a lot of ways, makes sense.”

Under terms of the June agreement, Towers Watson Chief ExecutiveOfficer John Haley would retain that post for the combined company,and Willis’s stockholders would hold about 50.1%. The companiessaid a merger would increase shareholder value by about $4.7billion because of cost savings, opportunities for increasedrevenue and tax savings. London- based Willis enjoys lower ratesthan U.S. companies.

Not taken lightly

Willis CEO Dominic Casserley said that the increased dividendwould allow Towers Watson shareholders to have another $357.4million before his shareholders take their stake in the consultingfirm. And he described that as an acceptable cost, given thebenefits.

“This is not a decision that we take lightly,” he said in aseparate statement.

Willis gained 1% to $45.11 at 9:46 a.m. in New York trading.Towers Watson climbed 1.1% to $130.60. That compares with $137.98on the day before the initial deal was announced.

Health insurance

Willis is seeking Towers Watson to better compete with largerinsurance brokers Marsh & McLennan Cos. and Aon Plc, which alsohave substantial consulting operations. Marcus said that TowersWatson’s push into employer-based health insurance exchanges couldmake it a good fit with Willis.

The broker agreed in June to pay investors 2.649 Willis sharesand a one-time cash dividend of $4.87 for each Towers Watson sharethey own. Towers Watson said the terms were based partly on 60-daystock averages through the end of May and that its main focus wason the company’s long-range prospects.

“We think this revision will satisfy enough TW shareholders forultimate approval,” Meyer Shields, an analyst with Keefe Bruyette& Woods, said in a note, using the companies’ ticker symbols.“We also expect WSH shareholders to approve the revised deal, giventhe very significant potential synergies.”

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