Great-West Offers $4.8 Billion For Canada Life
Great-West Lifeco Inc. has come to the rescue of Canada Life Financial Corp., Toronto, with a takeover offer worth about $4.8 billion in U.S. dollars.
Canada Life has been struggling to fend off a $4.1 billion offer from another Toronto company, Manulife Financial Corp.
Manulife says its offer is a good deal for Canada Life shareholders, given the low price of Canada Life stock, but Canada Life says the Manulife offer fails to reflect the value of its operations.
Canada Life has reported $84 million in net income for the fourth quarter of 2002 on $1.5 billion in revenue and $45 billion in assets.
Both Manulife and Great-West, which is based in Winnipeg, Manitoba, say acquiring Canada Life would help them dominate the Canadian life market and increase their presence in the United States.
But Great-West has gone out of its way to praise Canada Life.
“We have great respect for the staff and management of Canada Life and look forward to working with them,” Raymond McFeetors, Great-Wests co-president, says in a statement.
Great-West says its parent company, Power Financial Corp., will put up at least $525 million in cash to help finance the deal. Great-West and Power Financial are both units of the Power Corporation of America, Montreal.
Analysts at Moodys Investors Service, New York, have raised questions about the scope of the deal.
The deal would increase Great-Wests share in Canada, but paying for Canada Life and integrating its operations with existing Great-West operations could be risky, the analysts note.
Reproduced from National Underwriter Edition, February 24, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.