GWL makes bid for Canada Life

Jeff Sanford

GWL's bid effectively ends Manulife Financial's hostile takeover bid for Canada Life and could see GWL--the third largest life insurer in Canada -- take over the number one spot, ahead of Sun life Financial.

The deal could also move the combined company into second spot in the defined contribution (DC) market, with $17 billion in pooled assets under administration -- Canada Life is currently ranked second in Canada with $11.2 billion in administered assets, as of June 30, 2002 and GWL is third with $5.8 billion.

Should the deal go through, Canada Life will become a part of financial services giant Power Corp., which already includes Investors Group, London Life Co., Mackenzie Financial Corporation and GWL.

Early indications from GWL are that Canada Life will operate as a stand-alone subsidiary as London Life does now. It appears that GWL will leave Canada Life's network of 3,000 independent salespeople in place, merging the company's group life and health insurance practices into GWL's back office operations.

The GWL offer surprised industry watchers. Offering $1 billion more than Manulife, GWL, with the backing of Investors Group and Power Corp., will offer Canada Life shareholders $44.50 per share. That works out to a 41.5% increase on the Canada Life share price as it stood when the Manulife takeover bid was announced. Manulife offered $40 a share. GWL has also attached a break-up fee of $288 million to the offer (about 4% of the total).

As for job cuts, company officials say it is too early to speculate what jobs may be cut. They say that it is likely there will be some reductions in staff size.