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Sun Life Financial Inc. rose after it said on Sunday it has agreed to buy oral health care company DentaQuest for $2.47-billion.
The transaction will be financed using cash and debt, Sun Life said in a statement, adding that the deal is expected to close in the first half of 2022.
Sun Life expects the acquisition to add about $100-million to its underlying income from the U.S. in its first full-year after closing, executives said on an analyst call on Monday.
The acquisition of the U.S.’s second-largest provider of dental benefits, with 33 million members, gives Sun Life the “flexibility to maneuver” in future and make additional investments, as well as to take advantage of proposed expansions of health care funding in the U.S, the executives said.
In a research report released Monday, Desjardins Securities analyst Doug Young said: “In our opinion, the acquisition is bang on strategy, helps put capital to work and is accretive to underlying EPS and ROE. That said, DentaQuest leans more toward providing dental coverage through government programs, a segment we are less familiar with, and this segment of the market could be more subject to government-related risks.”