Manulife Sells $2.5 Billion Shares, 2nd Public Offering In 12 Months

November 20, 2009 6:51 p.m. EST

Toronto, Ontario (AHN) - A day after Manulife Financial announced its $2.5 billion second public offering in 12 months, shares of the company dipped by over 6 percent. Stocks closed Thursday on the Toronto Stock Exchange at $18.95, down by $1.23.

Manulife announced the stock offering on Wednesday. The common stock was offered at $19 a share, down by 40 cents from the $19.40 offer the Canadian insurer made in its first offering in December 2008, which sold $2.28 billion worth of shares.

The company's second public offering was handled by a syndicate of underwriters led by Scotia Capital and RBC Dominion Securities. The public offering is expected to close by about Nov. 30, 2009, after which Manulife will gain access to the highest level of capital since it became public.

Manulife Chief Executive Office Donald Guloien said in a statement, ""We are positioning Manulife for the long term. We believe this transaction achieves the fortress level of capital necessary to buffer against more conservative economic scenarios and to position us to take advantage of highly attractive acquisition and growth opportunities."

He added, "Our action today is consistent with Manulife's conservative approach to capital management. Achieving these strong capital levels enables us to offer an even higher degree of security to present and future customers. It also gives us tremendous flexibility."

Some current stockholders are not happy with the second public issue. One of Manulife's largest stockholders said the second public offer resulted to more share dilution.

Following the drop in Manulife's share prices, Credit Suisse forecast the insurer's per share earnings will be 93 cents in 2009 and riseto $1.85 in 2010.