Manulife Financial has entered into an agreement to acquire the Canadian-based operations of Standard Life for about $4 billion in cash.
Several months ago, Standard Life decided to explore the sale of its Canadian operations through a competitive process and it was the successful bidder, says Manulife president and CEO Donald A. Guloien.
“One of the key reasons we were interested in this company is its people in Quebec: We want to increase our presence in the province and use the very talented employee base to grow and expand our business in Quebec, throughout Canada and indeed the world,” he adds.
Standard Life is the fifth-largest life insurer in Canada, with 2,000 employees, 1.4 million customers, and $52 billion of assets under management.
Manulife expects the transaction to improve its capability to serve customers in various areas, including group benefits, group retirement, asset management, and liability-driven investing.
The company doesn’t anticipate any significant immediate job losses because the integration will take between 18 and 24 months.
It expects the vast majority of jobs in the province will be retained and forecasts there will be more jobs in Quebec than Standard Life has currently.
The transaction will be funded, in part, from the net proceeds of the issuance of approximately $2.1 billion of subscription receipts by way of a $1.6 billion public bought deal and a concurrent private placement to the Caisse de dépôt et placement du Québec for $500 million.
“This transaction, and the financing, maintain our strong capital position, and in no way inhibit our ability to pay dividends,” Guloien explains. “In fact, it will enhance our ability to increase dividends in the future.”
Standard Life Investments has also entered into a new global collaboration agreement with Manulife, which intends to distribute Standard Life Investments’ funds into Canada, the United States and Asia.
Following completion of the sale, Standard Life Investments’ Boston office will become a hub for its entire North American business, and a new dedicated office in Toronto is planned to continue serving Standard Life Investments’ institutional clients locally.
“The sale and new global collaboration agreement represent the next chapter in Standard Life Investments’ continuing growth story,” says Keith Skeoch, CEO of Standard Life Investments.
The closing of the transaction is subject to regulatory approvals and the approval of the shareholders of Standard Life plc. Subject to the receipt of all necessary approvals, the deal is expected to close in the first quarter of 2015.
Related articles: