Nationwide Mutual Insurance Co. will acquire Harleysville Mutual Insurance Co. in a deal valued at around $800 million.

“This combination brings together two best-in-class companies that share a mutual heritage and a focus on meeting the long-term needs of our policyholders,” says Steve Rasmussen, CEO of Nationwide.

Michael Browne, president and CEO of Harleysville, says the transaction “will enable us to expand our business for our independent-agency partners and to enter important new markets from a position of even greater strength.”

Under the deal, which is expected to close early next year, Harleysville Mutual will merge with Nationwide Mutual, while the publicly traded Harleysville Group will become a newly formed subsidiary of Nationwide Mutual. Shareholders will receive $60 per share in cash.

According to Google finance, there are more than 27 million shares of Harleysville outstanding. A Nationwide company spokesman explains that under a complicated scenario the number of publicly held shares Nationwide would pay for amounts to somewhere between $760 million to $800 million. The remaining outstanding shares held by Harleysville Mutual would be acquired by Nationwide and retired.

Under the agreement, Harleysville will join Nationwide's P&C independent-agency business unit under the Harleysville brand. Its current headquarters in Harleysville, Pa. will “serve as an integral part of the combined company's national, independent agency-based platform.”

Browne will become the president and COO of the Harleysville company.

The companies say that the combined operations will have an estimated net surplus of more than $13.5 billion and over $16 billion in annual direct-written premiums.

The agreement between Harleysville and Columbus, Ohio-based Nationwide is still subject to regulatory approval. The companies say they expect the transaction to close by early next year.

In an interview with NU, Rasmussen and Browne say they believe both producers and the carriers will benefit from the transaction.

“For independent agents, this adds another carrier that has a national footprint and presence [to their portfolio],” says Rasmussen. “This adds to Nationwide's portfolio that includes Allied and all our other independent-agency companies that are roughly a third of our revenue.”

He says the addition of the Harleysville book of business and the relationships the company has developed in the Northeast “make us a more formidable national independent-agency company for both commercial and personal lines.”

Browne says the geographic strength of Harleysville east of the Mississippi complements Allied Insurance, the independent-agency affiliate of Nationwide that is strong west of the Mississippi.