UPDATE 1-US consultants Towers Perrin, Watson Wyatt to merge

* Merger valued at about $3.5 billion

* New company to be called Towers Watson & Co (Updates with details, spokesman comment, byline)

By Aarthi Sivaraman

NEW YORK, June 28 (Reuters) - Management consulting firms Towers Perrin Forster & Crosby Inc and Watson Wyatt Worldwide Inc (WW.N) on Sunday announced an agreement to merge into a new publicly-traded company that will expand their global reach.

The deal, valued at about $3.5 billion, will hand Watson Wyatt shareholders 50 percent of shares on a diluted basis in the new firm, called Towers Watson & Co.

Towers Perrin shareholders and some of its employees are entitled to the other 50 percent of shares, though on a restricted basis, the companies said in a statement.

Towers Watson & Co's board will have 12 members with each company designating six, according to a spokesman.

A new location for the combined companies' headquarters has not been finalized, he added. Currently, Watson Wyatt's headquarters are in Arlington, Virginia while Towers Perrin makes its headquarters in Stamford, Connecticut.

Watson Wyatt Chief Executive John Haley will be the new company's CEO, while Towers Perrin CEO Mark Mactas will serve as its president, the statement said.