In the wake of Canada’s new financial service legislation and the relaxation of ownership restrictions, the first of the big lifeco mergers has been proposed. SunLife Canada is prepared to pay $7.3 billion in an all-share deal to acquire Clarica as a wholly-owned subsidiary. The deal will first have to pass muster with Clarica shareholders, the Minister of Finance and both Canadian and U.S. regulators. Under the deal, Clarica shareholders will exchange each common share for 1.5135 SunLife common shares. Clarica shares are valued at $54.65 under the terms of the deal. The combined operation will be Canada’s largest life insurer based on total revenues of $21.7 billion, assets under administration of $344 billion and total assets of $140.2 billion. It will also have the largest customer base at 7 million Canadians. “The transaction also represents a material step towards Sun Life Financial’s goal of achieving leading positions in key North American markets, creating an even greater base for international expansion,” says SunLife chairman and CEO Donald Stewart. A transition team, led by Clarica president and CEO Bob Astley, will manage the merger. Clarica will retain its name and operate from Waterloo, Ontario, while SunLife headquarters will stay in Toronto. The process of merging Clarica’s U.S. operations with that of SunLife is still under discussion. About 1,500 jobs are expected to be lost through the transition. The deal is expected to close in the second quarter of 2002.