Standard Life received a bullish response yesterday from markets and analysts to the sale of its Canadian business for C$4bn (£2.2bn), as shares sky-rocketed and analysts upgraded forecasts after the mega deal.
Shares in the huge FTSE 100 listed insurance and investment firm surged by nearly 11 per cent in early trading, before finishing the day up just over eight per cent to close at 417.20p yesterday evening.
The sale of Standard Life’s Canadian arm to Toronto-based insurance giant Manulife will also provide another major windfall for Standard Life’s shareholders, as the Edinburgh-based insurer said it would return £1.75bn in proceeds from the deal as a dividend, worth 73p per share.
Yesterday, a range of analysts also weighed in on Standard Life’s deal, expected to be completed in the first quarter of 2015, with a very favourable response from the vast majority.
Barclays analysts said: “We believe Standard Life owns some of the most attractive assets in UK Life insurance, but were concerned that there remained a large book of mature products, including Canada, would temper earnings growth. The sale of its Canadian operations to Manulife removes one of the drags to growth, at an attractive valuation.”
Analysts at Deutsche Bank added: “In addition to the high price achieved, we see the deal as strongly positive, marking an exit from a slow growing, capital-intensive, spread-based business and leaving the group more focused on fee-based revenues.”
BEHIND THE DEAL
JP MORGAN | ED SQUIRE AND SIMON PILKINGTON
1 Simon joined in 1999 and Ed joined in 2001, with both now part of JP Morgan’s financial institutions group, led by Piers Davison
2 Simon worked on deals such as the TSB IPO, and the sale to Capital One of HSBC’s US credit card unit. Ed worked on the Aviva’s sale of RAC and Friends Provident’s sale to Resolution
3 Ed Squire was an early supporter of the Bolingbroke Academy free school in Battersea, opened in 2012 by the ARK school network, founded by millionaire financier Arpad Busson
Scotiabank acted as financial advisers to Manulife, with Osler, Hoskin & Harcourt and Torys acting as legal advisers. Blake, Cassels & Graydon acted as legal advisers to Standard Life.