Lessons from Manulife-Loblaw deal collapse

Industry expert highlights governance insights from deal fallout

Lessons from Manulife-Loblaw deal collapse

The cancellation of a prescription coverage deal between Manulife and Loblaw highlights a key lesson in corporate governance and communication. 

This case underscores the importance of involving the corporate board in decision-making processes. 

Richard Leblanc, a professor of governance, law, and ethics at York University, spoke to BNN Bloomberg, emphasizing the importance of management consulting with the corporate board on major decisions. 

Manulife initially announced that Loblaw-owned pharmacies, including Shoppers Drug Mart, would be the primary providers for its prescription specialty drug programs. However, the plan was withdrawn after facing public and governmental backlash.  

Leblanc suggests that this scenario likely stemmed from management's decision-making in isolation from the board. He stressed the value of seeking a "second set of eyes" on significant actions to prevent potential missteps. 

Leblanc further pointed out that, especially in sectors like grocery where competition is fierce and regulatory scrutiny is high, top-level scrutiny of major external partnerships is crucial. He mentioned a specific concern regarding competition, noting that abrupt decisions without board consultation could conflict with regulatory desires for increased competition. 

Reflecting on changes in corporate governance practices post-pandemic, Leblanc advised that now even minor transactions should involve the board, marking a shift from previous practices where management might proceed without board awareness in less significant matters.