Canada's Manulife will acquire John Hancock of Boston

John Hancock Financial Services Inc has agreed to be acquired by Manulife Financial Corp in a stock swap worth about US$10.4 billion, confirming a deal involving one of the oldest names in the US financial services industry.

Under of the deal, shareholders of Boston-based John Hancock will receive 1.1853 shares of Manulife for each of their shares, or US$37.60 per share, based on Hancock's Wednesday closing price.

Reports a merger or acquisitions for John Hancock, which provides insurance and investment products and services, mostly in North America, have been circulating in recent days. John Hancock spokesman Stephen Burgay declined to discuss specifics of the talks.

"The bottom line is what they saw here was a perfect fit, an opportunity to make a great combination," Burgay said Sunday.

Founded 1862, John Hancock grew from a single-room office to a financial giant in Boston, dominating the city's business life and, eventually, its skyline with the 60-story John Hancock Tower, a glass skyscraper completed in 1976 and sold earlier this year for US$910 million. The company became publicly traded in 2000.

Toronto-based Manulife also said it will spend as much as US$2.2 billion to repurchase its common shares. Manulife and its subsidiaries also provides financial products and services, including individual life insurance, group life and health insurance, pension products, annuities and mutual funds.

Company expect the merger to close in the second quarter of next year, pending regulatory and shareholder approvals.

The deal will give the company a market capitalization of US$25.6 billion and US$1.4 billion in combined net income, based on last year's figures.

The deal between the two companies, which had US$246 billion in assets under management as of June 30, would create a company ranked fourth in the US in individual life insurance sales.

The combined company would be Canada's largest individual and group life insurer.

Manulife's Dominic D'Alessandro will be president and CEO of the company, which will have its global headquarters in Toronto.

John Hancock CEO David D'Alessandro will become chief operating officer; a year after the deal is complete, he will become president of Manulife. The men are not related.

"We see this as a unique strategic opportunity to combine two exceptionally strong companies into a single, integrated, global market leader,'' Dominic D'Alessandro said in a statement.

"Not only is consolidation in our industry inevitable, but for companies of our size to compete and grow in the future, it is necessary," David D'Alessandro said in a statement.

"This transaction gives us the scale, capital base and diversity of product and distribution to grow as a business, as well as the ability for John Hancock to remain strong and rooted in the city of Boston," he said.