Commission approves Irish Life takeover
THE EUROPEAN Commission has approved the takeover of state-owned insurance company Irish Life by Canada Life, removing one of the last hurdles in the Government's efforts to sell the former Irish Life and Permanent subsidiary.
The sale of Irish Life, which the Government paid €1.7bn for in 2011, is required by the troika under the terms of Ireland's bailout. The State acquired a 99.8pc stake in the company in late 2012, after injecting €2.7bn into troubled parent, Irish Life and Permanent, in 2011.
The European Commission said yesterday that the deal would not create any monopoly or anti-competitive issues. It said there would still be a sufficient number of competitors remaining following the deal.
EU approval was the last real obstacle to the takeover, first announced in February of this year. Canada Life, owned by global insurance giant Great-West Life Assurance and ultimately by holding company the Power Corporation of Canada, will pay €1.3bn for the Irish company. The deal is backed by one of Canada's richest men, Paul Desmarais, the largest private shareholder in Great-West.
It has been hampered by a variety of factors, including eurozone instability and legal challenges by shareholders. A previous takeover attempt by Canada Life collapsed in November 2011 as the eurozone crisis escalated.
Irish Life and Permanent shareholders have also sought to block the deal. They alleged earlier this year that the Government's acquisition of its stake in the group was illegal. The nationalisation of Irish Life and Permanent meant that shareholder equity was diluted from 100pc to just 0.2pc.
As part of the takeover, Irish Life's name will be retained and its business will be combined with the insurance and pensions business of Canada Life's Irish subsidiary. Irish Life has a much larger operation in Ireland, with around 2,000 staff, while Canada Life Ireland has 300.
Irish Life is the biggest payer of private pensions in this country, has about a third of the fund management business here and 29pc of the life and pensions market. Canada Life has about 5pc of the market. Great-West chief executive Allen Loney has called the deal "transformational" for the group's Irish business. He said it would make the company a market leader in the life insurance, pension and investment management sectors in Ireland.
A voluntary redundancy scheme is being implemented to trim 15pc of the combined Canada Life Ireland and Irish Life workforce of around 2,500 people, meaning about 375 employees will be let go.