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Quebec-based Desjardins Financial Group is buying Western Financial Group Inc. (WES.T) in a cash transaction worth C$443 million or C$4.15 a share, a move that will significantly boost its presence in Western Canada.


Investors in Western Financial are reacting warmly to the deal Friday. Its stock is up 67% in Toronto to C$4.09 on more than 3 million shares.


The insurance and financial-services company has 121 offices in British Columbia, Alberta, Saskatchewan and Manitoba and about half a million customers.


In a research note, GMP Securities analyst Stephen Boland called Desjardins a surprise acquirer, as he believed that an insurance company or other large brokerage would be a natural acquirer. But he noted that Western Financial's struggling Bank West may have been a "stumbling block" for such entities.


Boland doesn't expect a higher bid to emerge, and he said that, although the Desjardins bid is below his C$5 target on Western Financial, it's "not unreasonable."


He recommends tendering to the offer.


Desjardins is the biggest cooperative, or member-owned, financial entity in Canada. The bulk of its operations are in Quebec and Ontario. In Quebec, it's the largest financial-services entity.


Western Financial reported total assets of C$890 million at Sept. 30. Desjardins has more than C$175 billion in assets.


(Courtesy of The Wall Street Journal)

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