Investors worry about Towers Watson

June 29, 2009

Watson Wyatt and Towers Perrin executives are excited about their deal to create Towers Watson, but investors are not cheering as much. 

Watson Wyatt’s shares plunged nearly 10 percent in Monday morning trading, as investors woke up to the all-stock deal valued at about $3.5 billion, announced Sunday.

A Citi analyst downgraded the Watson Wyatt, which is publicly held, to “hold” from “buy”, calling the companies’ three-year integration plan a “major risk.” 

Among the concerns: integration and deal costs may lower earnings, and rivals like Hewitt and Mercer could grab people and other opportunities in the interim. 

It will take three years to achieve savings of $80 million through job cuts and the streamlining of overlapping operations. The companies also expect one-time costs of $80 million from the merger and “significant noncash expenses” for the first two years. 

“The merger will create a global leader, but the three-year path to accretion could imply a difficult integration,” Citi analyst Ashwin Shirvaikar wrote in a research note.

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Ecofasa turns waste to biodiesel using bacteria

A group of Spanish developers working for a company called Ecofasa just announced a new biofuel made up from trash. This isn’t a biodiesel made from used frying oil; instead, it’s made from general urban waste which is treated by bacteria. The result of that bacteria? Fatty acids that can be used to produce standard biodiesel. According to the company’s CEO, the process is fully biologic, competes with no feedstock and is really sustainable. However, the process doesn’t yield that much actual fuel: just one liter of biodiesel from 10 kg of trash. The project is now in a development phase, but Ecofasa said that a commercially viable model could be ready in three to four years. .jsp?article_id=3225 X4


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