Insurance company Willis Group Holdings agreed to buy Towers Watson for $18 billion. The Willis Tower in Chicago was formerly known as the Sears Tower. (AP Photo/Robert Ray, File) ORG XMIT: NYSB202M(Photo: Robert Ray, AP)Insurance broker Willis Group Holdings (WSH) said Tuesday it has agreed to buy human resources consulting firm Towers Watson (TW) for about $8.7 billion, a move aimed at growing its advisory business.In the all-stock deal, Willis will pay 2.65 Willis shares and a one-time dividend of $4.87 for each Towers Watson share — for a total of about $125 a share.Shares of Towers Watson, based in Arlington, Va., fell 4.4% Tuesday to $131.88.Willis, based in London, rose 4.3% to $47.33.The deal, approved by the companies’ boards of directors, is expected to close by the end of the year. The combined company’s equity value will be about $18 billion, the companies said.Willis and Towers Watson have complementary products, helping corporate clients deal with benefits and other human resources issues. Towers Watson offers services and consulting in health insurance, retirement packages and executive compensation. Willis mostly sells insurance products, including accident insurance, weather, property and product recalls.In the deal Willis, which specializes in midsize companies, is eyeing Towers Watson’s vast network of Fortune 500 corporate clients.Towers Watson’s consulting services can be marketed to Willis’ roster of midsize corporate clients. The combined company also wants to find more customers for Towers Watson’s “Exchange Solutions” services – a tool that allows employers to move employees or retirees to individual health plans available in health insurance marketplaces – by pitching it to Willis’ “significant middle-market relationships,” they said.”This is a tremendous combination of two highly compatible companies with complementary strategic priorities, product and service offerings,” said Towers Watson CEO John Haley, who will become the CEO of the post-merger company.Based on the companies’ 2014 financial performance, the post-merger company, to be called Willis Towers Watson would have about $8.2 billion in revenue. They employ about 39,000 in over 120 countries, the companies said.”The opportunity to deliver significant savings to our growing middle market client base with Towers Watson’s market-leading private exchange platform is particularly attractive,” said Willis CEO Dominic Casserley, who will remain as the post-merger company’s president.In integrating in the overlapped areas, the companies anticipate saving $100 million to $125 million, the companies said.The merged company will also reap tax benefits from the deal. Towers Watson now pays more than 30%, but the new rate after the merger will be in the “mid-20% range” within two years, Casserley said during a conference call with analysts Tuesday.”The tax benefits that are derived just happen to be a nice consequence of the transaction,” Haley said.