Towers Watson (NYSE:TW) has agreed to buy the largest private Medicare exchange in the U.S. for $435 million in an effort to boost its health benefit offerings for clients.
The New York professional services company said late Sunday that the acquisition of Extend Health provides employers with specialized retiree health benefits with the ability to compare the individual Medicare plans of thousands of providers through a private exchange.
The move comes amid an expected jump in retirement by baby boomers over the next few years and as interest in exchanges continues to heighten while the Supreme Court reviews President Barack Obama’s health-care law.
Since Extend Health started running the private Medicare exchange in 2006, which allows consumers to compare plans side-by-side from different carriers, it has helped more than 130 companies, including Ford Motor (NYSE:F) and Caterpillar (NYSE:CAT), save money on their health offerings.
Its service includes a solution that allows retirees to select from thousands of private Medicare plans from more than 75 national and regional insurance companies, as well as access to proprietary exchange and decision support technology.
Tower Watson said it expects the deal to be dilutive to earnings by 2% or less in the first year after close and then slightly accretive in the second year.
Following the close, which is slated to occur in 60 days pending customary closing conditions, Extend Health will operate as a new business segment within Towers Watson, joining its benefits, talent and rewards, and risk and financial services groups.
“This agreement brings together two forward-thinking organizations with a commitment to providing market-leading solutions to our clients,” Towers Watson CEO John Haley said in a statement.
The new exchange solutions group will be led by Extend Health’s founder and CEO, Bryce Williams, and will have more than 300 employees and a working exchange with more than 30 Fortune 500 employers and 200,000 retirees.