Hancock acquisition completed
Plan is to compete with biggest firms
TORONTO -- Manulife Financial Corp. completed its $13.9 billion purchase of John Hancock Financial Services Inc., creating the second-biggest insurer in North America by market value.
Toronto-based Manulife agreed in September to pay 1.1853 shares for each share of Boston-based John Hancock, in the biggest Canadian takeover ever. Hancock shares ceased trading on the New York Stock Exchange yesterday, Manulife said.
Manulife chief executive Dominic D'Alessandro, 57, wants to compete with the world's biggest insurers, such as American International Group Inc., and expand in the United States and Asia. The combined company has about $258.8 billion in funds under management, and will rank fourth in the US for individual life insurance.
Shares of Manulife rose $1.74, or 4.6 percent, to $39.99 in trading on the Toronto Stock Exchange after dropping as much as 4.8 percent earlier in the day. About 26.4 million shares changed hands, more than 15 times the three-month daily trading average.
Manulife said it received a waiver from the Toronto Stock Exchange to buy its shares in the last 20 minutes of trading in the event that sell orders exceed the number of shares available for purchase, in what's known as a sell side imbalance. Company spokesman Peter Fuchs declined to say whether Manulife bought shares yesterday. The stock soared almost 9 percent in the final 20 minutes of trading.
Investors expect many Hancock shareholders will sell their Manulife shares once the swap is completed because the stock isn't part of the Standard & Poor's 500 index. Hancock was removed from this index this month.
Manulife plans to buy back as many as 79 million shares to reduce its outstanding float after it issues about 342 million new shares for the purchase. The 79 million shares are worth $3.2 billion at today's closing price.
Manulife expects the acquisition to increase earnings per share by 2 percent before one-time items this year and 8 percent in 2005. It will also produce cost savings of $101.8 million this year, rising to $254.5 million in 2006, mostly through job cuts and combining real estate. The company's headquarters will remain in Toronto, with US operations in Boston.
The value for the takeover is based on yesterday's closing share price for Manulife.
