Manulife Financial’s proposed $4-billion deal to buy Standard Life’s Canadian operations will help improve its core lines of business, say one analyst.
Not only does the transaction allow Manulife to attain share in the Quebec market, writes Morningstar analyst Vincent Lui in a research report, “it also expands Manulife’s capabilites in group benefits, asset management, and investment risk expertise, an area in which Standard Life has excelled.”
While the deal seems expensive, an acquisition of this scale could not have come at a better time for Manulife, especially when its Asian fund business is showing signs of slowing, he adds.
“As Manulife continues to build out its fund platform globally, this transaction should increase earnings contributions from less capital-intensive, fee-based businesses largely driven by assets under management,” Lui writes.
The acquisition will also push Manulife higher on Benefits Canada’s Top 40 Money Managers ranking.
In our most recent list, Standard Life was ranked No. 10 with $18.6 billion in Canadian pensions assets under administration while Manulife was No. 22 with $12.9 billion in Canadian pension assets. Including the acquisition of Standard Life’s Canadian operations, Manulife would jump to No. 5, just ahead of State Street Global Advisors.
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