With its latest major acquisition, Allstate now wants to insure your gadgets.
Allstate announced Monday that it has agreed to acquire consumer protection plan provider SquareTrade for $1.4 billion. SquareTrade, founded in 1999 and based in San Francisco, provides extended warranty service for electronic devices.
The transaction is expected to close in January 2017.
"Allstate's consumer-focused strategy of providing unique products will be further enhanced with the acquisition of SquareTrade," Allstate CEO Tom Wilson said in a statement. "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."
The acquisition represents a big tech move by Allstate, which launched an innovation center in Chicago's Merchandise Mart earlier this year. SquareTrade works with retailers like Amazon, Costco, Sam's Club and Target to help insure things like mobile devices, laptops and tablets with protection plans.
Allstate said it will acquire SquareTrade using corporate cash and debt issuance. It's purchasing the privately held company from a group of shareholders, including Bain Capital Private Equity and Bain Capital Ventures. This is Allstate's second $1 billion acquisition since 2011, when it acquired both Esurance and Answer Financial for a combined $1 billion.
"Joining Allstate will enable SquareTrade to expand into new markets and products that Steve Abernethy and I did not imagine possible when we founded the company in 1999," said Ahmed Khaishgi, co-founder and CEO of SquareTrade, adding "With Allstate, we will gain a broad set of capabilities enabling us to further leverage our distribution, brand and team, while retaining our entrepreneurial spirit."
Photo by Carrrrrlos, CC BY-ND 2.0
