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Manulife Financial Agrees to Acquire Standard Life Plc

Date:05-09-2014

Toronto-based Manulife Financial Corporation said that it has agreed to buy the Canadian operations of Standard Life Plc for around $3.7 billion (C$4 billion) in cash, in a deal that significantly increases the insurer's presence in Quebec.

Manulife Financial said that the transaction will bolster earnings after the first year and increase its presence in Quebec, where it has long been under-represented.

Both the companies said that they will also expand an existing wealth and asset management partnership, with Manulife distributing Standard Life funds in Asia, Canada and the United States, and Standard Life doing the same in the UK retail market.

This deal, which is a subject to the approval of regulators and Standard Life shareholders, is expected to close in the first quarter of 2015.

Donald Guloien, the Chief Executive of Manulife said that Standard Life decided several months ago to look at a sale of its Canadian operations, and Manulife Financial won the bid.

According to Guloien, the acquisition is a great match with their organization for a whole variety of reasons; they’ve developed some very creative products that are a terrific complement to theirs.

David Nish, CEO of Standard Life said that the deal allows the UK company to fully realize the value of the business, which has been turned around in recent years, while expanding their collaboration on distribution.

According to Nish, this could triple the $6 billion of assets under management Standard Life has already gained through a similar product distribution deal with Manulife's John Hancock unit.

Nish said he expects to return $2.88 billion (1.75 billion pounds) to Standard Life shareholders through a specific dividend that allows certain investors to report it as either income or capital.
 
Guloien said that it will also increase their earnings capacity beyond their 2016 core earnings objective of C$4 billion and increase their ability to pay dividends.

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