It has been announced that Towers Watson, a global professional services company, has signed an agreement to acquire Extend Health, Inc., which operates the largest private Medicare exchange in the United States' in a deal worth $435 million, less net debt and certain transaction costs.
This combination, between two of the market leaders will provide innovative, best-in-class health care solutions that combine specialised retiree medical transition consulting with the choice and cost advantages of individual Medicare plans purchased on a private exchange.
Following closing, Extend Health will operate as a new business segment within Towers Watson, joining its three existing segments of Benefits, Talent and Rewards, and Risk and Financial Services. The new Exchange Solutions segment will be begin with more than 300 employees and an exchange that currently works with public and private sector clients, including more than 30 Fortune 500 employers and more than 200,000 retirees.
John Haley, CEO of Towers Watson, said, "The combination of Towers Watson benefits expertise and resources, and Extend Health's proven infrastructure and scalable exchange platform, positions us well to meet the needs of employers and retirees now and in the future."
Recent Towers Watson research found that 54% of employers with more than 1,000 employees are somewhat very likely to reconsider their current employer-sponsored plan strategy for post-65 retirees by 2015.
The Extend Health solution includes proprietary exchange and decision support technology. Its solution allows retirees the opportunity to select from thousands of private Medicare plans from more than 75 national and regional insurance companies, and employers to provide access to individual coverage, typically with a defined contribution subsidy. More employers have used Extend Health than any other company to transition their retirees to a private Medicare exchange.
"This is an important time for retiree health benefits. Both companies have a strong track record of helping employers develop strategies and create programs for employee and retiree benefits," said Bryce Williams, CEO of Extend Health.
The transaction is expected to close in less than 60 days, although it is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, before any deal can reach completion.
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