So much for the holiday lull - takeover rumours involving Canada’s financial services giants are back in full swing.
The latest involves Manulife, which, despite its own headaches, can’t entirely be counted out as an acquirer. Last week ING indicated that it was shelving its plans to seek a public listing for its Asian and European insurance and investment management businesses, and instead would explore a sale. It has hired Goldman Sachs and J.P. Morgan to talk to potential buyers, according to Reuters.
Manulife CEO Don Guloien has made it clear that he believes the Canadian insurer’s strongest future growth prospects lie in Asia, and so its name is being bandied about as one of the possible suitors, along with Asian rival AIA, among others.
“ING’s Asian life operations, of which about 75 per cent is evenly split between South Korea and Japan, with the rest in Malaysia, Thailand, China, Hong Kong and India, would be strategically very attractive to Manulife, increasing Manulife’s core Asian earnings by 50 per cent, as well as adding new market presence in South Korea and India,” Bank of Montreal analyst Tom MacKinnon writes in a note to clients.
The price tag could be in the neighbourhood of $6-billion.
“While such a deal looks attractive, we do point out that deals of this size have many complexities surrounding financing and regulatory approval,” Mr. MacKinnon adds. He also thinks that if it came to a bidding war, AIA would be able to outbid Manulife.
Meanwhile, Bloomberg reports that Royal Bank of Scotland has hired Lazard to find a buyer for all or parts of its equities and advisory operations, which employ about 3,500 employees, and Royal Bank of Canada has been named in numerous reports as a bidder for smaller parts of the business, such as the U.K. corporate brokerage.
RBC has long made it clear that it does not have the appetite for any major investment banking acquisitions, and sources tell the Globe that at this point in time – if anything – it would only be interested in small niche businesses that round out a hole it would like to fill. Its preferred method of growth on the investment banking front is to poach people, something that would be possible in this instance if RBS fails to find a buyer - in fact, it would likely be possible even if it does.
All of this comes as Toronto-Dominion Bank has another chance to make a play for BankUnited (see today’s earlier post for more details on that).
The takeaway? In the aftermath of the U.S. subprime crisis and the continuing European sovereign debt crisis, takeover candidates will be reaching out to Canadian banks and insurers.