More than 25,000 Irish shareholders of life assurer Canada Life must decide whether to encash their shares, following yesterday's decision by the European Commission to approve a takeover bid from rival Canadian firm, Great West Lifeco.
Last month, 99.4 per cent of Canada Life's shareholders voted to accept a takeover bid from Great West Lifeco, generating a €180 million windfall for equity holders. But the payout, which averages €7,200 per shareholder, was subject to regulatory approval of the merger.
Welcoming the Commission's speedy decision, Mr Tom Barry, managing director of Canada Life in Ireland was "delighted" the merger was now copperfastened. "It means we will have a very strong parent company that is 3½ times larger than our previous one and this gives us a firm footing in the life assurance market."
The transaction date for the two firms is July 10th but as Canada Life will continue to trade under its own name within the Great West Lifeco group, Mr Barry confirmed there would be no administration disruption to Irish policy holders. But he stressed it was crucial the 25,000 shareholders, who are also largely policy holders, notify the firm on how they wish to receive payment by the July 3rd deadline or risk receiving what is "left in the pot".
Under the terms of the takeover, Great West Lifeco is paying 60 per cent in cash, 29 per cent common shares and 11 per cent preferred shares for Canada Life.
A company source said most people would "want to cash in the shares" but with cash payouts limited, many shareholders may have to hold on to their equity stakes whether they liked it or not.
Canada Life now employs up to 1,000 people in Ireland due to the recent addition of the German operation, which created more than 100 jobs.
Mr Barry quickly dismissed any suggestion that these jobs would be under threat as a result of the merger. He said: "It's likely that some jobs will have to go in the US and Canada, but there are no overlapping synergies in Europe and so I don't imagine the merger will have any impact on jobs here at all."
