Great-West Agrees to Buy Canada Life

Great-West Lifeco Inc. agreed to buy Canada Life Financial Corp. for $4.8 billion, topping Manulife Financial Corp.’s hostile bid and pledging to cut costs by acquiring its smaller rival.

Shareholders of Canada Life, the country’s fourth-largest insurer, can choose to receive cash or common and preferred stock, or a combination. The offer from Great-West, controlled by Montreal’s billionaire Desmarais family, values Canada Life at 11% more than Manulife’s cash offer.

The purchase will turn Canada’s third-biggest insurer into its largest life insurer. Great-West Chief Executive Raymond McFeetors said the acquisition will boost earnings per share “immediately.”

Shares of Winnipeg, Manitoba-based Great-West fell 5.1% in regular trading on the Toronto Stock Exchange. Canada Life shares rose 6.3%.