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Jul 13, 2017

Manulife selling John Hancock would be 'a mistake': Shareholder

It'd be a mistake if Manulife were to sell John Hancock: Shareholder

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Manulife Financial should hold on to John Hancock, according to one shareholder.

The lifeco’s shares spiked in afternoon trading Thursday and have held the gains after The Wall Street Journal reported Manulife is exploring an initial public offering or spinoff of its John Hancock unit.

But Agilith Capital Principal Patrick Horan believes either decision would be a mistake by incoming CEO Roy Gori.

“It’s harder to go against the grain, having gone against it for so long, and wait for your moment to actually get better returns,” Horan told BNN in an interview on Friday. “I think, sadly, they may be just sort of changing CEOs at the wrong time when big decisions can be made … it’s going to be a mistake if they do sell it.”

Gori was announced as Don Guloien’s replacement in late May when the current CEO announced his retirement. He takes over the top job at the end of September.

Horan sees Thursday’s news as a shift in strategy with the incoming management.

“It was sort of a re-thinking of what has been going on. Manulife has been a story. They’ve had more variation in their earnings than most life insurance companies and I think the volatility has worn on it,” he said.

The Journal cited sources familiar with the matter, one of whom added the possible IPO or spinoff comes after Morgan Stanley advised on the situation for "some months."



However, Horan admitted to being a fan of the Hancock unit and told BNN he would buy into a possible IPO.

“We actually like the John Hancock business. After eight years of paying with this business, it’s been hammered by lower interest rates from their variable and annuity business. We see a turn. We see the wind at their back going forward and not in front of them.”

Manulife struck a deal on September 28, 2003 to buy John Hancock Financial Services in a stock deal that was valued at $15 billion at the time.

According to the Journal, some Manulife shareholders have been pushing the company to sell John Hancock outright.

However, one shareholder told BNN that the Manulife was more likely to spin off the Hancock business than sell it.

“It’s easy to say that you would do it, but it would be a matter of what the valuation is because it’s been disappointing,” said Campbell, Lee & Ross President Bruce Campbell in an interview with BNN Friday.

“I’ve heard that it would be worth four to five dollars per share. … I think the most likely thing would be a spinout as opposed to a sale.”

A spokesperson for Manulife declined to comment on the report when contacted by BNN.