* Reports higher profit, boosts dividend
* AGF shares up 6.2 pct, Laurentian up 2.5 pct
TORONTO, June 6 (Reuters) - A subsidiary of Laurentian Bank of Canada said on Wednesday it will acquire AGF Trust Co from mutual fund company AGF Management for C$415.5 million ($402.1 million), in a deal that will expand its lending capacity.
The bank, Canada’s eighth-largest, announced the transaction as it reported a 9 percent rise in second-quarter net income and said it had raised its quarterly dividend by 4 percent.
AGF’s shares were up 6.2 percent at C$12.45 near midday on the Toronto Stock Exchange, while Laurentian was up 2.5 percent at C$42.27.
Laurentian’s fully owned B2B Trust unit will pay C$242 million in cash for AGF Trust and will also repay debt and redeem preferred shares amounting to C$173.5 million in total after the deal closes in August, it said.
The deal also includes a contingent payment of up to C$20 million over five years if credit quality reaches certain criteria.
AGF Trust provides investments, term deposits, investment loans and real estate loans through more than 21,000 financial advisors and mortgage brokers.
It is expected to have assets of about C$3.8 billion at closing. Laurentian said the deal should result in a one-time charge of C$30 million-C$35 million and should add to its net income by about C$28 million-C$30 million annually as of 2014.
$1=$1.03 Canadian Reporting By Cameron French; Editing by Peter Galloway