Canada Life yesterday agreed a 7.3 billion Canadian dollar bid for the company from rival Great-West LifeCo. The cash and equity offer will see around 35,000 Irish shareholders get Can$44.50 (€27.26) a share.
The bid trumps an existing hostile cash and equity offer from ManuLife, another Canadian assurer, which had offered Can$40 a share, although its value had since fallen to around $38.50 as its share price slipped.
It also includes a provision allowing Great-West LifeCo to retain the support of Canada Life's board simply by matching any subsequent rise in ManuLife's offer. Analysts in Canada said ManuLife was unlikely to counterbid.
A spokesman for ManuLife said yesterday that it was aware of the latest offer for the company and was reviewing its position.
Shareholders can opt for cash or shares in the deal but the cash element is limited to 60 per cent of the offer. Above that, cash and shares will be issued in payment on a pro-rata basis. Great-West chief executive Mr Raymond McFeetors told The Irish Times that the company believed most people would be paid in the way that they chose.
Great-West LifeCo is a subsidiary of family-controlled Canadian group Power Financial. Its operations are concentrated in Canada and the United States but it does have an Irish presence with London Reinsurance in the IFSC along with sister company Investors Group, which runs an asset management operation from Dublin.
While the company will be looking for synergies following the acquisition, Mr McFeetors said the Irish operations of Canada Life were unlikely to shed jobs.
Canada Life employs 1,100 people in an operation that also covers the German market. Irish chief executive Mr Tom Barry said Great-West had recently been in Dublin to look at the Irish and German operations. "The whole gist of Great-West looking at us was with a view to it being an ongoing operation. Today's news certainly clarifies the situation going forward and I would imagine that Irish and German jobs are safe."
Mr Barry also revealed that the Irish operation had been seeking to expand into other European markets.
ManuLife's chief executive, Mr Dominic D'Alessandro, said the new bid was "a very generous offer". Quoted in Canada's Financial Post, he said: "We thought we had made a fair offer and we'll have to evaluate what our alternatives are."
Irish shareholders who have previously opted to accept the ManuLife offer are free to rescind that approval and opt for the higher Great-West LifeCo bid.
Around 54,000 Irish policyholders received shares when Canada Life abandoned mutual status in 1999. The majority, around 30,000, were carpetbaggers who had taken out policies just 18 months earlier in expectation of such a move. More than two-thirds of Canada Life's 180,000 Irish policyholders got nothing from the demutualisation.
While the number of shares received depended on a number of factors, all qualifying members got 155 shares. These were worth around €1,715 at that time. On the basis of the latest deal, they would be worth €4,218.
