Irish Life provides life insurance, pension management and investment services to more than one million customers — including about 800,000 individual policy holders.
It also manages assets worth the equivalent of $50 billion, or 37 billion euros, and employs about 2,200 people — almost all in Ireland.
"The acquisition of Irish Life is transformational for our companies in Ireland," Great-West president and CEO Allen Loney said Tuesday.
He said Great-West will become Ireland's leading provider of life insurance, pension and investment services with the single transaction.
The Winnipeg-based company began its pursuit of Irish Life when an auction process was launched in September 2011 but withdrew in November of that year due to the European sovereign debt and banking crisis.
Speaking from Dublin in a phone interview, Loney said that negotiations resumed about 2 1/2 months ago in November 2012, after the economy began to show signs of improvement.
Loney said Great-West was attracted by Irish Life's strong management, product range, market share and technology and heartened by improvements in the macroeconomic situation.
"It's a very youthful demographic here in Ireland. We feel very confident that there will be good growth in Ireland in time to come," Loney said.
"Certainly, the Irish economic situation and fiscal situation... is improved out of all recognition in the last 18 months or so."
The sale is part the Irish government's efforts to reduce its deficit by 2015 to three per cent of gross domestic product. It currently hopes to reduce this year's deficit to below 7.5 per cent of GDP.
"I am very pleased to announce that an agreement has been reached with Great-West Lifeco for the sale of Irish Life," Ireland's finance minister, Michael Noonan, said in a statement Tuesday.
"Today’s deal is the first time during this crisis that a company in which we have invested has been returned fully to private ownership."
Noonan said the transaction, which requires regulatory approvals, provides Irish taxpayers with a "full return on its investment in Irish Life."
Great-West (TSX:GWO) is one of Canada's largest insurance and wealth management companies and is part of the Power Corporation (TSX:POW) group of companies, one of Canada's largest non-bank financial conglomerates.
Several companies within the Power group announced they'll be participating in the deal.
Great-West says the acquisition of Irish Life will increase its profit by about 10 per cent in 2014, the first full year of ownership. The name Irish Life will be maintained and the company will absorb Great-West's other Irish operations.
The company said it plans to relocate the head office of its subsidiary Canada Life (Ireland) to Irish Life's headquarters in Dublin. It said "any job losses at the two companies will be achieved on a voluntary basis."
Great-West currently employs 600 people in Ireland, about half at Canada Life and the other half at a European headquarters that hosts the main data centre for its European businesses.
Great-West is aiming to introduce efficiencies related to computer systems that will reduce annual expenses by 40 million euros, or the equivalent of nearly C$52 million.
"But this transaction is not really driven by cost savings. It's more driven by the opportunity to bring within our group this tremendous company in the Irish market," Loney said by phone from Dublin.
The company will fund the transaction by issuing $1.25 billion of subscription receipts, of which $600 million will be purchased by other Power companies and $650 million will be sold through underwriters led by BMO Capital Markets.
Each subscription receipt will entitle the holder to receive one common share of Great-West Lifeco plus an amount equal to dividends declared by the company until the deal closes.
Trading of Great-West Lifeco shares on the Toronto Stock Exchange was halted after the announcement. The shares closed Friday, before the holiday weekend, at $26.78 — the highest in nearly two years.
— with files from David Paddon in Toronto