Manulife to buy Standard Life's Canadian assets for $3.7 billion

Thu Sep 4, 2014 8:11am EDT
 
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By Euan Rocha and Jeffrey Hodgson

TORONTO (Reuters) - Manulife Financial Corp MFC.TO and Britain's Standard Life SL.L have agreed a near-$4 billion deal for the Canadian operations of the British insurer as part of a broader global tie-up.

The C$4 billion cash deal will significantly expand Manulife's presence in Quebec and make Standard Life's earnings less volatile while helping it to continue to grow its asset management arm, analysts said.

Manulife said the transaction would boost earnings after the first year and more than double its presence in the largely French-speaking Canadian province, while Standard Life said it will return more than half of the sale proceeds to shareholders.

The companies will also expand an existing wealth and asset management partnership, with Manulife distributing Standard Life funds in Canada, the United States and Asia, while Standard Life reciprocates in the British retail market.

"I think this is a good deal for Manulife," Morningstar analyst Vincent Lui said, noting that Standard Life is a pioneer in areas such as liability-driven investments and that Manulife can benefit from the know-how gained via the acquisition.

Lui also said that the access and growth opportunities in Quebec are a huge bonus.

"Quebec is a market that has been to an extent ignored by a lot of the large Canadian insurers, so this deal gives Manulife a quick strategic entry point into that market," he said.

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A worker leaves the Standard Life House in Edinburgh, Scotland February 27, 2014. REUTERS/Russell Cheyne