Desjardins Group, Canada’s largest credit union, agreed to buy State Farm Mutual Automobile Insurance Co.’s Canadian unit and said the companies and a partner will invest C$1.6 billion ($1.5 billion) capitalizing the businesses.
Desjardins will purchase Bloomington, Illinois-based State Farm’s property and casualty and life insurance operations in the country, as well as its mutual fund and loan companies, according to a statement today by the Levis, Quebec-based cooperative. The transaction is expected to be completed in January 2015, the company said.
The deal “will enhance our position in Canada by expanding our customer reach and achieving economies of scale,” Monique Leroux, Desjardins chief executive officer, said in the statement.
State Farm, the largest U.S. home and auto insurer, is investing C$450 million in Desjardins shares and Credit Mutuel, a European credit union and longtime partner of Desjardins, will invest C$200 million, according to the statement. Desjardins is allocating C$700 million to expand its property and casualty business, while the cooperative’s other units will allocate C$250 million, the firm said.
Desjardins will operate the businesses under the State Farm brand for an agreed license period, according to the statement. State Farm has 1,700 employees and more than 500 agents in Canada, according to the statement.