(Bloomberg) -- Towers Watson & Co. investors should reject aplanned merger with insurance broker Willis Group Holdings Plc,proxy advisers Institutional Shareholder Services and GlassLewis & Co. said. Willis declined the most since August in NewYork trading.

The consulting firm’s holders should seek improved merger terms,or “the better option at this time is to remain a standalonecompany,” Glass Lewis said in its report late Thursday. Shares ofTowers Watson had dropped when the deal was announced in June.

Both companies’ investors are scheduled to vote on the deal Nov.18. Willis agreed to merge with Towers Watson in an $8.7 billiontransaction to add consulting operations, helping it competeagainst diversified insurance-broker rivals Aon Plc and Marsh &McLennan Cos. Willis investors would own 50.1% of the combinedcompany, to be domiciled in Ireland and led by Towers Watson CEOJohn Haley. Towers Watson holders would get 2.649 Willis shares anda one-time cash dividend of $4.87 for each share they own.

“Although Towers shareholders might be willing to forgo apremium in exchange for the potential benefits of this transaction,the magnitude of the discount they are being asked to acceptappears excessive,” ISS said in its report.

‘Revenue synergies’

Towers Watson disagrees with the advisers because they focus onshort-term trading and discount the “significant” long- term valuecreation potential of the merger, the company said on Friday.London-based Willis said in a statement that the recommendation“neglects the estimated $4.7 billion in incremental value forshareholders that we expect through clearly identified cost, taxand revenue synergies.”

Willis dropped $1.32, or 2.9%, at 11:25 a.m. Towers Watsonslipped 1.1% to $127.79, compared with the closing price of $137.98the day before the deal was announced.

Towers Watson stakeholders including Driehaus Capital ManagementLLC, which owns more than 1 million shares, have said they’replanning to vote against the proposed deal, and that the consultingcompany’s quarterly results, announced Monday, highlight itsprospects as an independent firm.

“They came out with fantastic earnings that handily exceededmarket expectations,” Matthew Schoenfeld, an assistant portfoliomanager at Driehaus, said in a phone interview Friday. “It’s not inthe best interest of shareholders to sell at a 9 percent discountto market value for a company that is exceeding expectations andthat is doing quite well.”

‘Value proposition’

In a separate report, Glass Lewis recommended that Willisholders vote for the merger, saying that the deal would help thebusiness diversify.

“If the envisioned synergies are realized to the full extentexpected, we believe the deal would indeed prove to be a favorablevalue proposition for Willis,” the proxy adviser said.

--With assistance from Colin Keatinge in Tokyo.

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