The Successful Investor Hotline – Friday, February 22, 2013

Article Excerpt

GREAT-WEST LIFECO INC., $27.11, Toronto symbol GWO, has agreed to buy Irish Life Group Ltd., Ireland’s largest pension manager and life insurance provider. The company has over 1 million clients and $50 billion of assets under management. The government of Ireland purchased Irish Life in June 2012, after its former parent company, Irish Life & Permanent, ran into financial difficulty. Great-West will pay $1.75 billion for Irish Life when the deal closes in July 2013. To put that in context, Great-West earned $2.0 billion, or $2.06 a share, in 2012. To help pay for this purchase, Great-West will sell $1.25 billion of new common shares at $25.70 each. That will increase the number of shares outstanding by 5%. Big purchases like this add risk. However, Great-West has a long history of operating in Ireland. Moreover, the company expects to save around $52 million a year by combining Irish Life’s computer systems and offices with its own operations. These savings should help increase Great-West’s…