Manulife Financial Corp said on Wednesday it has bought AIC Ltd's Canadian retail investment fund business, boosting its mutual fund arm in another big-player takeover of an independent fund company.
Manulife, which did not disclose the value of the deal, said the move to buy Burlington, Ontario-based AIC's funds will boost its retail fund assets under management to C$13.7 billion ($12.5 billion) and be accretive to earnings, but declined to speculate on how much or when it expects the purchase to add to profits.
Shares in Manulife, North America's largest insurer, were up 1.1 percent at C$22.43 in midday Toronto trade, while the broader financial index was up 0.6 percent.
AIC, whose chairman, Michael Lee-Chin, has touted the firm as a buy-and-hold investment manager in the mold of Warren Buffett, had mutual fund assets under management of about C$3.8 billion, the two companies said in a statement.
My first reaction is it can't be anything significantly material, Scotiabank analyst Tom MacKinnon said of the deal.
Material moves in terms of (earnings) are usually disclosed, so when a company says it's accretive (but gives no detail) ... it means it's modestly accretive, he said.
The deal is expected to close by September 25, Manulife said.
Manulife Canada Chief Executive Paul Rooney said the purchase was a great fit for both companies.
This is a significant boost to Manulife's wealth management business in Canada, particularly since it adds top-quality funds and AIC's focused investment style to our already-strong lineup of funds, Rooney said in a statement.
Manulife said its mutual fund arm will manage all AIC funds in Canada, while AIC's investment management arm will continue to run 12 funds as an external manager under a new name. AIC will continue to sub-advise on a number of its flagship equity funds.
This sale reflects our overall strategy to return to our roots of managing money and concentrate on our investment advisory services, Lee-Chin said in a statement.
AIC's investment management arm will become a unit of Lee-Chin's privately held Portland Holdings Co after the deal, he said.
Our intent is to build on our core competencies and service the investment advisory market across Canada, Lee-Chin said in a statement.
(Reporting by Andrea Hopkins; editing by Peter Galloway)