Both entities, which advices companies on people and financial management, among others, have a good presence in India.
The merged entity to be known as Towers Watson would have annual revenues of more than US$3 billion, both companies said in a statement on Sunday.
The proposed deal would help both companies to diversify their businesses, expand their geographical presence and also boost growth.
The board of directors of the two firms have approved a definitive agreement for the proposed merger.
Watson Wyatt Chief Executive John Haley, would hold the same post at Towers Watson, while Towers Perrin’s Chief Executive Mark Mactas would serve as the President of the merged entity.
According to the statement, Towers Watson would focus its operations on three segments — benefits, talent and rewards, and risk and financial services.
Watson Wyatt shareholders would receive 50 per cent of the combined firm’s shares, while the remaining 50 per cent would be held by Towers Perrin’s shareholders.