TORONTO, Oct. 4 (Reuters) – Sun Life Financial (SLF.TO) has announced that it will acquire U.S. dental provider DentaQuest for $ 2.48 billion as part of its largest deal in two decades, becoming the last Canadian insurance company to capitalize on growth outside of its home market.
The deal to acquire the second largest dental provider in the United States, with more than 33 million members, will add approximately $ 100 million to its underlying U.S. income in its first full year after closing, have said the executives of Canada’s second-largest life insurer. during a conference call with an analyst on Monday.
Sun Life announced the deal late Sunday.
This is the largest acquisition since Sun Life bought Clarica Life Insurance, from which chief executive Kevin Strain joined the company, for C $ 7.3 billion ($ 5.8 billion) in 2002, according to a spokesperson.
Sun Life shares rose 1.7% to C $ 66.20 in morning trading in Toronto, compared with a 0.4% drop in the benchmark (.GSPTSE).
After synergies, which are expected to total $ 60 million, the company is expected to add 24 cents Canadian to underlying earnings per share and 50 basis points to its return on equity, said Scott Chan, analyst at Canaccord Genuity , adding that the transaction “should support Sun Life’s goals.” leading ROE metrics. “
The deal follows a series of other acquisitions in recent years by Canadian life insurers, who, facing limited growth at home and holding record levels of capital, are pursuing deals abroad, in especially in the United States recently.
Great-West Lifeco was the latest, agreeing in July to pay C $ 4.45 billion to buy the full-service retirement business from Prudential Financial Inc (PRU.N). Read more
Sun Life itself has grown into the US group benefits industry, but with smaller contracts, including US provider of medical information and navigation for health care PinnacleCare and the platform. Maxwell Health benefits.
He had previously signaled an appetite to expand his group insurance and stop-loss activities, which protect against unforeseeable losses.
The deal gives Sun Life the “flexibility to maneuver” into the future and make additional investments, particularly as it seeks to expand its pharmacy stop-loss activities as well as capitalize on the potential expansion of health care services and funding in the United States, executives said on the call.
Sun Life will incur transaction and integration costs of $ 250 million, executives said.
($ 1 = 1.2562 Canadian dollars)
Reporting by Nichola Saminather; Editing by Chizu Nomiyama and Emelia Sithole-Matarise
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