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Manulife launches $4.1B hostile bid
Staff and wires
TORONTO, Canada -- Canada's second-largest insurer, Manulife Financial Corp., has made a C$6.4 billion ($4.1 billion) hostile bid for rival insurer Canada Life Corp. The proposed takeover, dismissed by Canada Life as insufficient, would give Manulife back its No. 1 ranking in the Canadian insurance sector. Manulife, which already holds 9 percent of Canada Life, has extensive operations in Asia, including China, Japan, Indonesia, Singapore, Vietnam and the Philippines. In October, its Manulife Indonesia unit was named 2002 "Life Insurance Company of the Year" by the magazine Asian Insurance Review. That came after some mid-year turmoil in its Indonesian operations when Manulife Indonesia (PT AJMI) was declared bankrupt on June 14 by the Jakarta Commercial Court -- a decision Manulife immediately called "outrageous" and which it had overturned on appeal. "We don't need to do this (Canada Life) transaction to sustain our position or our growth. We just evaluated that the opportunity was a very attractive one to combine our two businesses," Dominic D'Alessandro, Manulife president and chief executive, told reporters. Manulife said Canada Life shareholders can receive C$40 in cash -- a 30-percent premium over the weighted average trading price over the last 20 trading days -- or 1.055 Manulife shares for each Canada Life share. Canada Life shares jumpA combined company would be the fourth-largest life insurer in North America, with total assets under administration at C$191.9 billion for the 12 months ended September 30. Shares of Canada Life jumped 29 percent, or C$9.05, to end at C$40.50 on the Toronto Stock Exchange, its highest level since April. Manulife stock slipped C$2.50 to C$35.40. As many as 1,200 jobs could be cut over two years if the merger is successful, D'Alessandro told a news conference. Most of these would likely come through attrition. The proposed takeover would need to be reviewed by Canadian Competition Bureau and the Office of the Superintendent of Financial Institutions. Two merger proposals involving four of Canada's five major banks were killed by the government in 1998. Recent rumored talks between Scotiabank and Bank of Montreal were also reportedly shut down by the federal government. Manulife said it had approached Canada Life last Friday with an offer of C$38 per Canada Life share, promising to raise this if Canada Life could "identify additional value." It then raised its bid to C$40 per share, with the same combination of shares and cash as announced on Monday, but decided to go public with the offer when Canada Life did not respond favorably. It said it would be "imprudent" to have an offer on the table without making the market aware of it. Reuters contributed to this report.
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