iA Financial Corporation, the holding company of iA Financial Group announced it has entered into an agreement to acquire Austin, Texas based IAS Parent Holdings, Inc. and its subsidiaries for US$720-million. The company says the acquisition will be funded by iA Financial Group’s excess capital.

According to the company, IAS is one of the largest independent providers in the U.S. vehicle warranty market. “IAS provides a comprehensive portfolio of vehicle warranties and related software and services sold through one of the industry’s broadest and most diverse distribution networks consisting of 4,300 dealers in all 50 states,” iA said in a statement released Dec. 4.

“We look forward to this new chapter in our U.S. expansion with great optimism, combining IAS with our already well-established presence in the United States and leveraging our strong track record of dealer services in Canada,” adds iA’s chief growth officer and head of the company’s U.S. operations since 2005, Mike Stickney. “Along with the high-quality senior management team of IAS who will be joining our organization, we will have the platform to pursue our growth strategy in the vehicle warranty market in the United States.”

The company’s president and CEO, Denis Ricard says “the U.S. market for extended auto warranties, valued at almost US$39-billion, is highly fragmented and provides significant opportunity for organic growth and consolidation.”

The transaction is expected to close in the first half of 2020. The company says it expects the contribution from this acquisition to be neutral to earnings per share in the first year and accretive in the second.