HDFC Life Insurance Friday said it will acquire Exide Life Insurance from Exide Industries in a deal worth Rs 6,687 crore.
“The board of directors of HDFC Life Insurance Company (HDFC Life), Exide Industries Ltd (Exide Industries) and Exide Life Insurance Company Ltd (Exide Life)... approved the transaction involving the sale of Exide Life Insurance to HDFC Life,” HDFC Life said in a release
HDFC Life will acquire 100 per cent stake in Exide Life Insurance from Exide Industries via issuance of 8,70,22,222 shares at an issue price of Rs 685 per share and a cash payout of Rs 726 crore aggregating to Rs 6,687 crore, it said.
The process for merger of Exide Life into HDFC Life will be initiated on completion of the acquisition, the insurer said.
The entire process, including the acquisition and subsequent merger, is subject to obtaining the relevant regulatory and other approvals, the release said
The proposed transaction will give customers access to a wider bouquet of products and service touch points. Employees and agents will benefit from a larger, stronger organisation, according to a press release.
The proposed transaction will accelerate the growth of the Agency business of HDFC Life. Exide Life complements HDFC Life’s geographical presence and has a strong foothold in South India, especially in Tier 2 and 3 towns, thus providing access to a wider market. Further, a good quality, predominantly traditional and protection focussed business, will augment the existing embedded value of HDFC Life by approximately 10 percent, it said
The embedded value of Exide Life, as on 30th June 2021, is Rs. 2,711 crore and has been reviewed by Willis Towers Watson Actuarial Advisory LLP. HDFC Life’s scale, market-leading digital and product innovation capabilities and prudent risk management strategy will aid in optimizing cost and over time, achieve higher margins for the acquired business.
Commenting on the proposed transaction, Deepak S Parekh, Chairman, HDFC Life said, “This is a landmark transaction, first of its kind, in the Indian life insurance space. It would enhance insurance penetration and further our purpose of providing financial protection to a wider customer base.”
Ms. Vibha Padalkar, MD & CEO, HDFC Life said, “We believe that this amalgamation can result in value creation for customers, employees, shareholders and distribution partners. It gives us an opportunity to realise synergies arising out of complementary business models, and further bolster our proprietary distribution network.”
Rajan B Raheja, Vice Chairman, Exide Industries Limited and Chairman, Exide Life Insurance Company Limited said, “The focus of Exide Industries has always been to enhance the value for its stakeholders. The proposed transaction is another step taken by Exide to meet above stated objective. It is likely to be a win-win situation for all stakeholders, since our subsidiary, Exide Life Insurance is going into the hands of HDFC Life Insurance, which has an established track record of value creation.”
Kshitij Jain, MD & CEO, Exide Life Insurance Company Limited said, “This transaction is testimony to the reputation that Exide Life insurance has built of being a well-managed company. We look forward to working closely with the HDFC life team on the proposed transaction. Being part of one of India’s most respected life insurance companies will certainly benefit our customers, employees, agents and partners.
JM Financial Limited and Ambit Private Limited provided fairness opinions to the Boards of HDFC Life and Exide Industries respectively.
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