American insurance company Allstate has agreed to purchase National General in a cash deal valued around $4 bn, or $34.50 per share.

As part of the agreement, National General’s shareholders will receive $32 per share in cash and closing dividends of $2.50 per share for each share held.

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Allstate will fund the share purchase by deploying $2.2bn in combined cash resources and, subject to market conditions and issue $1.5bn of new senior debt.

Allstate chair, president and CEO Tom Wilson said: “Acquiring National General accelerates Allstate’s strategy to increase market share in personal property-liability and significantly expands our independent agent distribution.

“The acquisition increases personal lines premiums by $4.0bn and market share by over 1% point to 10%. National General’s business and technology platforms will be utilized to further strengthen Allstate’s existing independent agent businesses. The transaction will be accretive to adjusted net income earnings per share and return on equity beginning in the first year.”

National General offers a range of property-liability products through independent agents with presence in non-standard auto insurance. The company also runs Accident and Health and Lender-Placed Insurance businesses.

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National General co-chairman and CEO Barry Karfunkel said: “National General’s operating expertise has enabled us to serve customers and independent agents well as we have grown both organically and through acquisition.

“We are excited about combining our team’s expertise and commitment with Allstate to become a top-five personal lines carrier for independent agents while offering a broader array of products. National General’s shareholders are also benefiting by unlocking the value created over the last decade.”

The transaction, which subject to regulatory approvals and other customary closing conditions, is expected to close in the beginning of next year.