Allstate acquires warranty provider for $1.4 billion

Northbrook-based insurance company Allstate Corp. said Monday it will acquire consumer protection plan provider SquareTrade from a group of investors for about $1.4 billion.

SquareTrade provides extended warranties for mobile devices, laptops and tablets, as well as other consumer electronics and appliances. The San Francisco-based company has built strong relationships with major retailers, including Amazon, Costco, Sam's Club, Target, Staples, Office Depot and Toys "R" Us.

"This acquisition expands Allstate's customer relationships with 25 million protection plans for consumer electronics and connected devices," said Allstate President and CEO Tom Wilson.

Wilson said SquareTrade has seen a fourfold increase in revenue over the last five years, and the acquisition is consistent with Allstate's history of product innovation.

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

"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," Khaishgi said.

Allstate will fund the acquisition using cash and debt issuance, subject to market conditions, with no impact on its existing share repurchase program. SquareTrade key shareholders include Bain Capital Private Equity and Bain Capital Ventures. The deal is expected to close in January 2017.