Stockwatch – Manulife Financial Corp. (TSE:MFC, Mkt cap 40.79B, P/E 10.38, Div/yield 0.16/2.82, EPS 2.11, Shares 1.86B) has announced its biggest deal in a decade, revealing the acquisition of the Canadian operations of Standard Life for $4 billion in cash, The Globe and Mail reports.
The purchase of Standard Life Oversea Holdings Ltd, which includes investment operations, retirement products as well as individual and group insurance, will see the company building on its capacity to serve customers across Canada and elsewhere in the world from Quebec.
The deal follows an auction process that began months ago, seeing off interest from other industry players such as Great-West Lifeco Inc, according to people involved in the process, the newspaper reported.
The deal represents the company’s largest since the $15 billion purchase of Boston-based insurer and wealth manager John Hancock ten years ago. Analysts say the acquisition will strengthen Manulife’s business lines that are more susceptible to the fluctuations of the market.
Manulife president and CEO Donald Guloien says the deal should – after the first year — add three cents per share of earnings over the next three years.
“We hope to add an executive team that will participate in the decision-making, not only that will affect all activities in Quebec (but) all activities throughout Canada,” he added.
Guloien told reporters in a conference call that the move has been made in consideration of best serving the company’s French-speaking clients.
He also moved to reassure current employees that job losses as a result of the procurement will be kept to a minimum.
“We believe (that) in the full integration, within the next 18 to 24 months, the great majority of jobs in Quebec will be maintained,” Guloien added.
Over the past five years, the Manulife has made tremendous strides in de-risking its balance sheet and improving profitability through increasing wealth management operations as well as redirecting the mix of products sold. The insurance companies will be amongst the beneficiaries should interest rates start to rise. MFC has one of the strongest capital bases in the industry and future dividend increases would not be unexpected.
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