(Bloomberg) — Willis Group Holdings Plc, the world's third-largest insurance broker, and risk adviser Towers Watson & Co. agreed to an all-stock merger creating a firm with a combined market value of $18 billion.

Towers Watson shareholders will receive 2.649 Willis shares for each share they own and a one-time cash dividend of $4.87 a share, according to a statement Tuesday. The combined company, of which Willis will own 50.1%, will be named Willis Towers Watson and be domiciled in Ireland.

"We view this as a defensive move by both companies," said Eamonn Flanagan, an analyst at Shore Capital Group Ltd. in a note to clients. "To us, Willis appears to be struggling to deliver on its own cost savings plans without damaging its own franchise and is losing key personnel. Towers Watson appears to be highly rated."

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