Canada Life rejects Manulife takeover offer as

(January 13, 2003) Canada Life came out swinging today in its battle to avoid being swallowed up by Manulife, rejecting Manulife’s hostile takeover bid as inadequate and urging shareholders to vote against the offer.

“Everyone knows that Manulife’s offer is inadequate,” said Canada Life CEO David Nield in a conference call with analysts. “The analysts know it’s inadequate, the markets know it’s inadequate, Manulife knows it’s inadequate.”

In December, Manulife offered Canada Life shareholders a choice of either $40 in cash or 1.055 Manulife common shares for each Canada Life common share.

At the time of the offer, its shares were trading near their 52-week low, Canada Life says. The price has since rebounded and the 20-day weighted average is $40.75 per share. Canada Life shares opened at $41.54 today on the Toronto exchange.

Nield adds that using a number of commonly accepted industry valuation methods, such as embedded value, book value and price/earnings ratio, the Manulife offer fails to match last year’s major insurance takeover, when Sun Life bought out Clarica.

“Manulife can afford to pay more,” Canada Life says. “Canada Life believes that Manulife has the ability to significantly increase its offer and still realize meaningful financial benefits for its shareholders.”

In a written response, Manulife said the offer, valued at around $6.4 billion, remains the “best choice” for Canada Life shareholders. “We understand that the Canada Life board wants to fulfill its fiduciary responsibility, but the reality is that the Manulife offer is the only offer on the table,” said Manulife CEO Dominic D’Allesandro.

Nield has been in touch with a number of other interested parties and says Canada Life has set up “data rooms,” allowing potential bidders to look at confidential company information. He refused to say how many companies have entered the data rooms.

D’Allesandro appeared to leave the door open for a higher Manulife bid, stating that if Canada Life could provide further information that demonstrated additional value, Manulife would consider re-evaluating its offer. “Canada Life has so far been unwilling or unable to provide that information,” he added.

The offer remains open until February 28, but Nield says it’s possible an extension will be necessary to deal with regulatory issues.

What do you think? Will Manulife increase its bid for Canada Life? What impact will this deal have on the insurance industry if it does go through? Share your thoughts in the “Free For All” forum of the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca