Jeff Ubben claims that maneuvering over the proposed merger between Towers Watson & Co. and Willis Group Holdings Plc is legitimizing short-term shareholder activism.

Ubben, who runs activist fund ValueAct Capital Management, says that the Institutional Shareholder Services’ recommendation that Towers Watson & Co. investors reject the merger encourages “bumpitrage,” write Beth Jinks and Katherine Chiglinsky for Bloomberg.

Ubben Criticizes "Bumpitrage" In ISS On Willis Merger

Ubben and ValueAct speak out against ISS report

Bumpitrage refers to a situation where shareholder activists buy stock in the target company in order to pressurize for a bump in the terms of the deal, according to a statement from ValueAct. Ubben’s fund is the second-largest shareholder in London-based insurance broker Willis Group.

“ISS encouraging stockholders to walk away from a highly accretive deal if they do not receive a renegotiation of the deal economics incentivizes the very shortest-term profiteering,” ValueAct said in the statement. “It gives an opening for short-term investors to run into every deal and attempt to collect a tax. When this goes badly, longer-term stockholders suffer the opportunity costs of missed value creation.”

In June Willis agreed to merge with Towers Watson in a move that would allow it to add consulting services, assisting its ongoing struggle with insurance rivals Aon Plc and Marsh & McLennan Cos. which are more diversified insurance companies. Proxy advisers ISS and Glass Lewis & Co. released a report last week in which they advised against the deal, citing an unfavorable valuation for the firm.

ValueAct pressing for deal to go through

Ubben became a member of the Willis board in July 2013, and has advocated for the deal since it was announced. In October he claimed that the deal would be completed by the end of the year and could see earnings double by 2018.

Activist fund ValueAct currently has over $19 billion in assets under management and is known for pushing for sales and other changes at companies it is invested in. The proposed deal would leave Willis investors with 50.1% of the combined company, which would be domiciled in Ireland and run by John Haley, Towers Watson CEO.

Towers Watson shareholders stand to receive 2.649 Willis shares and a one-time cash dividend of $4.87 for each share.