Great-West wins Canada Life shareholder vote by huge majority

(May 5, 2003) In a muted end to one of the life insurance industry’s livelier takeover skirmishes, Canada Life shareholders today overwhelmingly endorsed Great-West Life’s friendly bid, valued at $7.3 billion.

The shareholders endorsed the bid by 99.4% of those voting in person or by proxy during a meeting this morning at the Metro Toronto Convention Centre. In all, shares represented in the voting totalled 83,099,793 with 82,624,921 voted in favour of the bid and 474,872 against. Pending regulatory approval, Canada Life becomes a wholly owned subsidiary of Great-West, based in Winnipeg.

Great-West offered $44.50 per Canada Life share, or 1.1849 common shares of Great-West per Canada Life share, or 1.78 Great-West non-cumulative retractable preferred shares, or 1.78 non-cumulative preferred shares, or a combination of those alternatives. Great-West made the offer after repeated claims by Canada Life CEO David Nield that an earlier offer by Manulife Financial of $40 per Canada Life share or 1.055 Manulife shares per Canada Life share seriously undervalued the company.

The battle, fuelled at least in part by a belief that Canada Life was one of the last truly appetizing takeover prospects in the insurance industry, ended when Manulife subsequently dropped its bid on February 28, the expiry date of its offer, leaving little opposition to the Great-West bid, announced February 17.

Shareholders will now be asked to select between the Great-West options for their shares. “The mailing begins tomorrow,” said Nield, who plans to retire on closing of the deal, currently projected for early July.

The deal will not immediately affect the majority of financial advisors selling Canada Life individual lines if the two companies continue with plans as originally stated. When the bid was first announced, Nield and Great-West chief executive officer Raymond L. McFeetors promised that the Canada Life corporate identity would continue after the merger and that the company brand would continue on individual life products while group life insurance lines would be renamed for Great-West Life.

“That’s still the plan,” Nield told Advisor.ca after the vote. “That was the initial go-round but these things have a way of evolving,” he warned.

Nield also said that the company’s three Canadian distribution channels would remain intact. Canada Life currently distributes its individual lines through brokers working with managing general agents, brokers working directly with the company and national accounts at stock brokerage companies.

Art Melo is a Toronto-based investment writer.