Asia-Pacific Leads World for Deal Performance in Third Quarter 2010

Cross-Border Deals Outperformed Domestic Deals for Second Quarter in a Row

LONDON, October 25, 2010 - In a quarter that brought positive financial results to deal-makers
globally, those in Asia-Pacific led the pack by a significant margin, beating
the MSCI World Index [the Index] by an impressive 14.5 percentage points,
according to the latest Towers Watson Quarterly Deal Performance Monitor.
This represented a significant increase for Asia Pacific acquirers from the
prior quarter - and dramatically surpassed results for acquirers in North
America and Europe, who beat the Index by 1.4 and 6.7 percentage points,
respectively. Overall, the deal-makers in this quarter's group beat the Index
by 4.3 percentage points, a marked uptick from 3.1 percentage points in the
prior quarter. Even more telling, the overall performance year-to-date for
deal-makers is 3.9 percentage points above the Index.

The latest results of this quarterly M&A study, commissioned by global
professional services company Towers Watson and based on an analysis by the
UK's Cass Business School, continue a consistent pattern of positive
performance for deal-makers, affirming that deals do consistently create
value for shareholders.

While Asia Pacific led in performance, it did not lead in the number of
deals completed this quarter. North America took this crown with a total of
98 deals, over three times more than the other two regions - and up slightly
from the 94 deals recorded for North America in the prior quarter. In
Asia-Pacific, deal activity was virtually unchanged from the second to third
quarters, and the mix of domestic to cross-border deals held constant as
well.

"This quarter's Deal Performance Monitor highlights the notable rise in
performance by Asia-Pacific acquirers, which suggests that Asian companies
may be more focused on getting their deals right than doing more of them
right now," said Marco Kaster, Towers Watson's newly appointed M&A practice
leader for Asia Pacific. "To a great extent, this strong rise in performance
stems from Asian companies' improvement in their due diligence capabilities
and their recognition that an early focus on people integration issues is
more crucial to the success of the deal than ever before.

"While deal activity in the region increased only slightly quarter to
quarter, we anticipate that deal volume in Asia-Pacific will grow," Kaster
continued. "As the economy improves, countries such as China and India have
greater confidence in the credit markets and companies in the region will be
more active in seeking growth opportunities."

"Our Deal Performance Monitor still bears out the conclusions from much
of our past research that deals can and do create value," said Steve Allan,
Towers Watson's M&A practice leader for Europe, "even though the quarterly
results show a fair degree of variability in regional results."

"That doesn't mean that companies based in Asia Pacific have become
overnight experts in deal due diligence and integration preparation -
although our client experience does point to a greater concentration and
focus on pre-acquisition preparedness. But it does indicate the market
increasingly recognises that Asian company deals are a compelling route to
growth and thereby attract a premium in shareholder value."

Cross-Border Deals Show Strength Again

The other interesting finding this quarter is that, for the second
quarter in a row, cross-border deals outperformed domestic deals, albeit by a
very slight margin - with foreign acquirers beating the Index by 4.5
percentage points, compared to 4.3 points for domestic acquirers. While too
early to call this a trend, it's a significant finding in a period where more
and more companies are likely to be shopping for deals outside their home
countries. Consistent with our past analyses, most such deals occurred in
Europe, where 66% were cross-border, compared to 30% in Asia-Pacific and just
17% in North America.

"Because cross-border deals are more complex by nature, and therefore
harder to complete, they've typically created less value than domestic
deals," said Mary Cianni, head of Towers Watson's global M&A practice. "But
we saw this traditional finding turned on its head for the first time in our
Deal Monitor last quarter. While the results are more muted this quarter,
they are still positive. While it's too early to call this a sea change, it
does suggest that companies are applying some of the lessons learned in
domestic deal-making to cross-border situations. While there's no question
such deals will remain harder, given the national cultural differences that
come into play, learning to manage through these issues will also be
paramount as more and more companies seek growth outside their borders or
regions."

    M&A: the critical list for deal-makers

    Regardless of economic climate, Towers Watson recommends three critical
    steps for dealmakers:

    - Be diligent about due diligence. Careful and informed analysis during
      the bid phase is essential to avoid making potentially significant
      mistakes. Successful buyers understand how to manage this process with
      appropriate speed in an environment of incomplete information. They
      also understand the nuances of conducting due diligence across borders
      when access to information may be more limited.

    - Engage your internal deal partners early. Getting a head start on
      integration planning adds value and having "M&A-ready" leaders and
      managers helps to jump start the integration process.

    - Focus on integration execution: Grab synergies fast, and maintain
      momentum in key areas of value, such as leadership, communication and
      talent retention, all of which continue to be key differentiators
      between successful and less than successful deals.

    Towers Watson Quarterly Deal Performance Monitor Methodology

    - Focuses on deals completed in the third quarter of 2010 (July 01-
      September 30)

    - Sample data compared on a quarterly basis

    - All deals have a value of $100m or above

    - All analysis conducted from the perspective of the acquirer

    - Share price performance measured as percentage change in share price
      from six months prior to the announcement date to the end of the
      quarter (Q3 2010)

    - All deals where the acquirer owned less than 50% of the shares of the
      target after the acquisition were removed, hence no minority
      purchases have been considered. All deals where the acquirer held more
      than 50% of target shares prior to the acquisition have been removed,
      hence no remaining purchases have been considered.

    - Deal data sourced from Thomson One Banker

    - Total number of deals - 163

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional
services company that helps organizations improve performance through
effective people, risk and financial management. The company offers solutions
in the areas of employee benefits, talent management, rewards, and risk and
capital management. Towers Watson has 14,000 associates around the world and
is located on the Web at towerswatson.com.

    For information:

    Daniel Kahn
    +44(0)20-7367-5247
    dkahn@headlandconsultancy.co.uk

For information: Daniel Kahn, +44(0)20-7367-5247, dkahn at headlandconsultancy.co.uk