Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the fund listed below, which is established as a segregated fund in accordance with the Insurance Companies Act (Canada).

On February 12, 2018, Scotiabank and Jarislowsky Fraser (“JF”) announced that Scotiabank will acquire JF. The transaction is expected to close in fiscal Q3 2018, subject to regulatory approvals. The purchase price payable at closing of approximately $950 million will be satisfied primarily by the issuance of Scotiabank common shares.

The transaction has received the unanimous support of the partners of JF, and of Stephen A. Jarislowsky, who will continue his association with the business that will continue to carry his name.  As a retention measure, an earn‐out of up to $56 million in additional Scotiabank common shares may be paid to key JF employees based on achieving growth targets over the next several years.

JF will retain its name and will become an affiliate of the Scotiabank asset management business. JF expects to operate autonomously from an investment perspective and has expressed that the day-to-day management of clients’ portfolios as well as the investment decision-making process and culture will not change. The firm’s Investment Strategy Committee will continue to oversee the structure of all client portfolios in order to ensure that their long-standing conservative, low-risk philosophy is applied firm-wide. The JF management team will continue to lead its existing business and its head office will remain in Montreal, Quebec.

Rationale

The acquisition allows Scotiabank to expand its institutional business under the well-known brand of Jarislowsky Fraser. JF has been experiencing low growth in the high-net-worth and institutional space and believed they needed access to product development and global distribution in order to grow.

We note that the Jarislowsky family retained the ownership of the firm and the payouts to JF partners are largely in compensation for surrendering their voting rights in the firm. We therefore do not believe the proceeds paid to partners are as substantial as the transaction amount suggests. The key ongoing retention mechanism will be the “earn-outs,” which will be locked for five years for partners of the firm and three years for other key personnel.

Overall, we are not overly concerned with the impact of the transaction in the short-term, given the unanimous vote in favour of the acquisition, the continuity of key personnel, and the retention incentives in place. Over the long-term, Investment Solutions will evaluate how the transaction impacts JF’s culture and ability to attract and retain high quality personnel, as well as JF’s focused approach to investment style and investment products.

Questions?

Please contact your Sun Life Financial Group Retirement Services representative.