More than 25,000 Irish shareholders of the life assurer Canada Life will receive a windfall payment as part of a payout worth €180 million in July.

The payout, which averages €7,200 per shareholder, was agreed yesterday when Canada Life shareholders voted to accept a takeover offer from its Canadian rival, Great West Lifeco.

At a meeting in Canada, 99.4 per cent of shareholders who took part in a ballot, voted in favour of the Can$7.3 billion (€4.5 billion) merger, which will create Canada's biggest life assurer.

The takeover bid by Great West Lifeco gives shareholders the option of exchanging each Canada Life share they own for Can$44.50 in cash, shares, or a combination of both cash and shares.

Shareholders were advised by Canada Life yesterday to specify how they wish to receive the payment. It will write to shareholders to advise them of their options later this week.

The deadline for return of this information is July 3rd and the transaction is expected to close on July 10th, the company said.

Under the terms of the takeover, Great West Lifeco is paying 60 per cent cash, 29 per cent common shares and 11 per cent preferred shares for Canada Life.

It has said it will do its best to accommodate shareholder's preferred method of payment. But as the amount of cash is limited, shareholders could find their cash sum scaled back in the deal.

A shareholder who gets a cash payment for his or her Canada Life shares will be subject to capital gains tax charged at a rate of 20 per cent on the profit they made on the shares. The average gain made by Irish shareholders over the past four years is believed to be worth more than €4,000 each.

The takeover agreement also gives shareholders the option of exchanging each Canada Life share for 1.1849 Great-West Lifeco common shares. Shareholders can defer paying tax on the profit made from Canada Life shares by choosing this option.

Shares in Great-West Lifeco were trading at €39 on the Toronto stock market following the announcement yesterday.

Many of Canada Life's Irish shareholders were so called "carpetbaggers" who took out policies just 18 months before the firm abandoned its mutual status. The opportunists were then given shares in the company when it floated on the stock market in 1999.

Mr Tom Barry, managing director of Canada Life in Ireland, said he was delighted that so many Irish people had benefited from the success of Canada Life.

"The company has invested heavily in Ireland, choosing it as its gateway to Europe by establishing the German operation here in Dublin," said Mr Barry.

The German division has created more than 100 new jobs in the Republic.

Canada Life will remain a separate entity in the Great-West Lifeco group and retain its name. But it is still unclear how many jobs will be lost as a result of integration of the two companies.

"Planning to integrate has been started, but until you get into the integration phase and the assessment phase, it would be speculative to even talk about job losses," Mr David Nield, Canada Life chairman and chief executive, said after the voting results were announced.

"It will be up to the new owners to decide but there's nothing that has been guaranteed or committed to other than the price."

At the time of the initial announcement, Great-West Lifeco said it expected to save Can$290 million in costs when it combines the two operations.

The transaction is still subject to regulatory approvals. - (Additional reporting, Reuters)