The board of directors of Canada Life has dismissed as inadequate a takeover bid from Manulife, the Toronto-based financial services provider, urging shareholders, including 50,000 Irish investors, to hold out for a better offer.

Manulife countered by insisting its €38 per share tender was "the only one on the table" and said it remained confident shareholders would set aside the board's misgivings and make their own decision.

Canada Life directors claimed Manulife could afford to raise substantially its December 9th bid and is attempting to acquire the group, which employs 460 in the Republic, on the cheap.

"Canada Life believes that Manulife has the ability to significantly increase its offer and still realise meaningful financial benefits for its shareholders," the directors said.

The offer, which expires at the end of February, is priced at valuation multiples substantially lower than those derived from comparable transactions, they added in a terse statement. The bid was a cynical one, tendered when Canada Life shares languished at a one-year low, according to directors.

The board said it was considering alternatives and had arranged to provide confidential information to third parties considering entering an improved offer.

But Manulife remained adamant that its offer was the only viable bid in town and claimed that, at a price-to-book value 1.77 times above the average for recent similar transactions, the bid accurately reflected Canada Life's long-term growth potential. The tender was not pitched at speculative investors seeking a quick pay-off said company president, Mr Dominic D'Alessandro.

He added: "Manulife's offer represents full and fair value for the shareholders of Canada Life. We are providing shareholders with a 30 per cent premium on the price of their shares and a generous valuation. We believe Canada Life shareholders will see the advantages of our offer and will make their own decision to tender their shares.

"The Manulife offer also provides Canada Life shareholders with a choice between cash and receiving shares in Manulife, already a high-performing, financially strong company."

Manulife said Canada Life policyholders who retained free shares issued when the group demutualised in 1999 would receive an average payment of €6,250 should they accept its offer. Most of these have an average of 250 shares each.