Great-West Lifeco Inc. said Wednesday that it will acquire a full-service retirement business from Prudential Financial Inc. for $3.55 billion.
The Canadian insurance-centered financial holding company said the acquisition, which will be done through its U.S. subsidiary Empower Retirement, will add significant scale and capabilities to the company.
The new business covers 4,300 workplace savings plans, around 4 million participants and $314 billion in assets under administration.
"The addition of this retirement business increases Empower's base to over 16.6 million participants, 71,000 workplace savings plans and approximately $1.4 trillion in assets under administration," Great-West Lifeco said.
The total transaction value includes about $2.1 billion of capital to support the business, and Great-West Lifeco said it expects to fund the transaction with about $1.15 billion of limited recourse capital notes and $1 billion of short-term debt.
Empower expects to incur one-time integration costs of around $170 million and deal costs of around $55 million, but the company noted that Empower's contribution to Great-West Lifeco's earnings is expected to grow to 30% by the end of 2023.
The deal is set to close in the first quarter of 2022, and integration is expected to be completed in 24 months.