Willis Towers Watson has agreed to acquire TRANZACT, a direct-to-consumer health care organization that links individuals to U.S. insurance carriers, in a $1.2 billion transaction.
TRANZACT was acquired by a Clayton, Dubilier & Rice (“CD&R”) fund in 2016.
In a statement, Willis Towers Watson said that TRANZACT will operate as an integral part of Willis Towers Watson's benefits delivery and administration (“BDA”) business, which focuses on the development and delivery of administrative solutions for employers, employees, and retirees.
TRANZACT employs approximately 1,300 individuals, including 850 licensed agents. TRANZACT combines digital marketing, sales, and data science to connect individuals to leading U.S. insurance carriers.
TRANZACT currently markets products including Medicare Advantage, Medicare Supplement, prescription drug plan (“PDP”) and an array of ancillary products including dental, vision, life, and indemnity.
John Haley, the chief executive officer of Willis Towers Watson, said, “We are delighted to announce the acquisition of TRANZACT, which represents a significant growth opportunity in the direct-to-consumer U.S. health care space and speaks to Willis Towers Watson's renewed focus on strategic M&A opportunities. This deal will accelerate our direct-to-consumer strategy and help create an end-to-end consumer acquisition platform.”
David Graf, the chief executive officer of TRANZACT, said, “We believe joining our complementary strengths and strategies will greatly benefit TRANZACT's carriers and consumers. The powerful combination of our technology-driven, direct-to-consumer solutions and Willis Towers Watson's scale, leading infrastructure, and participant engagement capabilities creates a unique and differentiated capability in the marketplace.”
“Under a strong leadership team, TRANZACT has built a world class lead generation capability underpinned by cutting edge technology and analytics,” said Russ Fradin, CD&R's operating partner and chairman of TRANZACT. “We see a bright future for TRANZACT and its valued consumers as part of Willis Towers Watson. The CD&R team looks forward to working closely with Willis Towers Watson to help with integration and growth through 2020.”
Gene Wickes, head of Willis Towers Watson's BDA segment, said, “Reaching consumers directly will significantly advance our overall growth strategy. Willis Towers Watson will now have access to an additional 35 million retirees and growing through direct-to-consumer channels and will be able to serve a diverse market that is growing at approximately 10,000 lives per day.”
The total purchase price is $1.2 billion in closing consideration, with an additional potential earn-out of up to $200 million payable in either cash or stock in 2021 if certain financial targets are achieved. The total purchase price includes $1.1 billion of cash consideration and $100 million of cash or stock consideration payable at close. Upon closing, the transaction is expected to be immediately accretive to Willis Towers Watson on an adjusted earnings per share basis.
Willis Towers Watson said that it has committed term loan financing from BofA Merrill Lynch to complete the transaction. The transaction is expected to close in the third quarter of 2019.
The transaction is subject to customary closing conditions and regulatory review and approvals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act.
BofA Merrill Lynch is acting as financial advisor and Weil, Gotshal & Manges LLP as legal advisor to Willis Towers Watson. J.P. Morgan Securities LLC is acting as financial advisor and Debevoise & Plimpton LLP as legal advisor to TRANZACT and CD&R.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].