Lévis, QC-based Desjardins Group announced a definitive agreement on Wednesday to purchase State Farm Canada, headquartered in Bloomington IL.
The acquisition, expected to close January 2015, will include State Farm Canada’s property and casualty (P&C) insurance, life insurance, Canadian mutual fund, loan and living benefits companies.
Desjardins will become the second largest P&C insurance provider in Canada upon the transactions conclusion. State Farm Canada’s 1,700 employees in Ontario, Alberta and New Brunswick will continue to work under the State Farm brand for an agreed license period.
“This acquisition will allow Desjardins to develop a broader, multi-channel distribution network across the country, while continuing to meet the needs of State Farm’s Canadian client base,” said Monique Leroux, chair of the board, president and chief executive officer of Desjardins Group, in a statement. “At the same time, it will enhance our position in Canada by expanding our customer reach and achieving economies of scale.”
As part of the transaction, State Farm agreed to invest $450 million in non-voting shares into Desjardins’ post-closing property and casualty insurance business. The deal also includes an investment by Paris-based Crédit Mutuel, a long-term partner of Desjardins, of $200 million, while Desjardin itself will allocate approximately $950 million towards the growth of the State Farm Canada companies.