American personal lines insurer Allstate has agreed to acquire consumer protection plan provider SquareTrade for about $1.4bn.

Headquartered in both San Francisco and London, SquareTrade distributes consumer protection plans through several US retailers including Amazon, Target, Costco, Sam’s Club, Staples, Toys “R” Us and Office Depot.

The company protects mobile devices, laptops and tablets, and other consumer electronics and appliances from malfunctions, accidental damage and life’s frequent mishaps.

Allstate will buy the company from several shareholders that include the Bain Capital Private Equity and Bain Capital Ventures.

Allstate CEO Tom Wilson said that through the acquisition, the consumer-focused strategy of Allstate in offering unique products will be further improved.

Wilson added: “This acquisition expands Allstate’s customer relationships with 25 million protection plans for consumer electronics and connected devices. SquareTrade’s exceptional customer service, innovative product design, analytics and supply-chain logistics have led to a four-fold increase in revenue over the last five years and are consistent with Allstate’s history of product innovation.”

Allstate will fund the acquisition amount using its corporate cash and debt issuance depending on market conditions. The personal lines insurer said that the deal will not affect its existing share repurchase program.

The acquisition transaction is likely to be reduced in Allstate’s earnings per share for three years. Depending on regulatory approvals and customary closing conditions, the dilution will also include the amortized intangible assets.

SquareTrade co-founder and CEO Ahmed Khaishgi the deal will allow the company to expand into new markets.

The acquisition is likely to be closed in January 2017.


Image: Allstate will acquire SquareTrade for $1.4bn. Photo: courtesy of Allstate Insurance Company.