NU Online News Service, Feb. 17, 6:34 p.m. – Great-West Lifeco Inc., Winnipeg, Manitoba, has come to the rescue of Canada Life Financial Corp., Toronto, with a solicited takeover offer that has a value of about $4.8 billion in U.S. currency.
The deal price would include Great-West common stock, Great-West preferred shares and up to $2.9 billion in cash, the companies say.
Power Financial Corp., Great-West’s parent company, has agreed to provide at least $525 million of the cash, Great-West says.
Power Financial and Great-West are both units of Power Corporation of America, Montreal.
Canada Life has been trying for weeks to fend off an unsolicited, $4.1 billion takeover offer from Manulife Financial Corp., Toronto.
Manulife has insisted that its offer is a good deal for Canada Life shareholders, given the current price of Canada Life shares, but Canada Life says the Manulife offer is inadequate because it is priced at valuation multiples substantially below those derived from comparable transactions and fails to reflect the “unique value and growth prospects of Canada Life.”
Great-West, which owns London Life Insurance Company in Canada as well as Great-West operations in Canada and Great-West Life & Annuity in the United States, says success at acquiring Canada Life would give it a leading market share in all key Canadian life insurance market segments.
“In the United States, Great-West Life & Annuity will integrate the operations of Canada Life, thereby providing more distribution opportunities and strong earnings accretion,” Great-West says.
The Great-West offer is subject to approval by Canada Life shareholders along with insurance and antitrust regulators in Canada, the United States, the United Kingdom, Ireland, Germany and Europe.
Great-West hopes to complete the deal by July 31, and it says it will give more details about its offer soon in a circular that will be mailed to Canada Life shareholders.
Canada Life notes that it is still open to receiving better offers.
“Canada Life has agreed not to solicit further proposals for the acquisition of Canada Life, but is permitted to accept a superior proposal which is more favorable to Canada Life,” Canada Life says.
If Canada Life accepts a “superior proposal,” it would have to pay Great-West a termination fee equal to about 3.95% of the acquisition price, or at least $190 million.