Canadian Desjardins Group has reached a definitive agreement with State Farm, a P&C mutual insurance company in the US, to acquire its property and casualty and life insurance business in the country.

Under the terms of the agreement, Desjardins will also purchase State Farm’s Canadian mutual fund, loan and living benefits companies.

Pending receipt of regulatory approvals and satisfying customary closing conditions, the transaction is likely to conclude during January 2015.

Upon completion of the transaction, Desjardins will operate State Farm Canada businesses under the State Farm brand for an agreed license period.

In accordance with the terms of the agreement, State Farm will invest C$450m in non-voting preferred shares into Desjardins Group’s post-closing property and casualty insurance business, which will comprise the newly acquired State Farm Canada property and casualty operations.

Once the deal is completed, Desjardins Group will emerge as one of the second largest P&C insurance provider in Canada with annual gross written premiums of approximately $3.9bn.

Desjardins Group board chair, president and CEO Monique Leroux said, "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.

"At the same time, it will enhance our position in Canada by expanding our customer reach and achieving economies of scale."

Barclays served as the financial advisor and Skadden, Arps, Slate, Meagher & Flom and Gowling Lafleur Henderson worked as legal advisors to State Farm. Desjardins Securities and BNP Paribas acted as financial advisors and McCarthy Tetrault and Mayer Brown were legal advisors to Desjardins.