NU Online News Service, Dec. 17, 12:36 p.m. – Sun Life Financial Services of Canada Inc., Toronto, has agreed to acquire Clarica Life Insurance Company, Waterloo, Ontario, through a stock swap with a value of about $4.6 billion in U.S. dollars.

Donald Stewart, chairman of Sun Life Financial, says the proposed deal would create a bigger, stronger company that was better equipped to expand outside Canada.

The combined company would rank first in the Canadian market in the group life, health and retirement markets, Clarica and Sun Life Financial report.

The deal is subject to approval by Clarica shareholders, voting Clarica policyholders, the Canadian Minister of Finance, and other regulators in the United States and Canada.

Clarica has reported $194 million in net income for the first nine months on $2.8 billion in revenue.

Sun Life Financial generated $402 million in net income during the same period on $7.5 billion in revenue.

The terms of the deal agreement call for Sun Life Financial to trade 1.5135 shares of its common stock for each share of Clarica common stock.

At current share prices, the deal is worth $35 per Clarica share, but the value will fluctuate along the prices of the shares involved in the trade.

If the deal is completed:

  • Stewart will serve as chairman and chief executive officer of the combined company. Bob Astley, now head of Clarica, will serve as president of Canadian operations.
  • The combined company will locate its headquarters in Waterloo, but Sun Life Financial will continue to have corporate offices in Toronto, and Clarica will operate as a separate unit based in Waterloo.
  • The combined company will keep the Sun Life Financial offices in Wellesley Hills, Mass, but Sun Life Financial and Clarica will talk about integrating their U.S. operations later, during a “transition planning process,” the companies say.
  • The combined company could eliminate 1,500 jobs. Today, Sun Life Financial and Clarica employ 8,600. The companies say they hope to eliminate many positions through attrition, but they are setting aside $16 million to help employees who might be dislocated as a result of the acquisition.
  • Merrill Lynch & Company Inc., New York, advised Sun Life Financial. Goldman Sachs & Company Inc., New York, and TD Securities Inc., Toronto, advised Clarica.