John Hancock Financial Services has accepted a stock exchange purchase offer from Manulife Financial Services, with the merged company valued at $25.6 billion. The sale represents an 18.5% premium over Fridays closing price for John Hancock common shares.
A major acquisition for the Toronto-based carrier comes as no surprise, following Manulifes failed hostile takeover bid for Canada Life (see Annuity Market News, March 2003). At the time, many observers speculated that Manulife would respond by bolstering efforts to find a likely target south of the border.
David D'Alessandro, now head of John Hancock, will become CEO of Manulife after the merger and, after a years time, president. He will report to Dominic D'Alessandro (no relation), who is now president and CEO of Manulife. He will also become chairman and CEO of the companys U.S. operations, which will remain headquartered in Boston.
Consolidation of the companies operations will take place over the next three years and is expected to result in $255 million in cost savings. David DAlessandro will oversee the integration process.
John Hancock, which had been on the block for some time, had been running out of options, according to a report in the Boston Globe. After a failed bid to sell to Prudential Financial and ongoing talks with Citigroup about swapping ownership of the Travelers Life operations for Hancock stock, Manulifes offer was most attractive. "The alternatives were not pretty," Hancocks DAlessandro told the Globe.