PCC, which owns 64.1% of PFC, has offered 1.05 of its shares and C$0.01 in cash for each Power Financial share held.
PCC co-chief executive officers, Paul Desmarais and André Desmarais, will step down from the roles after 23 years, the companies said, with PFC CEO Jeffrey Orr taking charge.
Paul will continue as chairman and André as deputy chairman of PCC.
The Canadian company said it would save about C$50 million ($37.59 million) per year in cost reductions within two years of the deal close, expected in February.
Shares of PCC were up 7.4% at C$34.25 in morning trade.
The company said it would raise its second quarter dividend by 10% to 44.75 Canadian cents per share.
(Reporting by C Nivedita in Bengaluru; Editing by Shinjini Ganguli)