HDFC Life to acquire Exide Life for Rs 6,687 Cr
IANS 03 September 2021
HDFC Life Insurance Company Limited (HDFC Life) on Friday announced the acquisition of Exide Life Insurance Company Ltd (Exide Life) from Exide Industries Ltd for Rs 6,687 crore.
The process for merger of Exide Life into HDFC Life will be initiated on completion of the acquisition. The entire process, including the acquisition and subsequent merger, is subject to obtaining the relevant regulatory and other approvals.
The Boards of three companies approved the transaction on Friday morning.
The total cost will be met by HDFC Life by issuing 8,70,22,222 shares on preferential basis at a price of Rs 685 per share to Exide Industries and a cash of about Rs 726 crore totaling Rs 6,687 crore.
According to Exide Industries, it has invested a total of Rs 1,679.59 crore in Exide Life.
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.
The embedded value of HDFC Life was Rs 27,331 crore.
The acquisition is expected to be completed before June 30, 2022.
Post merger of Exide Life with HDFC Life, the shareholding pattern of the latter will be - HDFC Ltd 47.9 per cent, Exide Industries 4.1 per cent and Others 48 per cent.
As to the rationale for acquisition, HDFC Life said, the proposed transaction will accelerate the growth of its agency business.
The Rs 4,937.46 revenue Exide Life with a networth of Rs 1,481.42 crore 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, Exide Life's predominantly traditional and protection focussed business, will augment the existing embedded value of HDFC Life by approximately 10 per cent.
Exide Life has 36,710 agents as on June 30, 2021.
Meanwhile, the share prices of HDFC Life came down after opening at Rs 742 on Friday after the deal was announced. The previous day closing price of the scrip was Rs 758.
On the other hand, the shares of Exide Industries flared up to Rs 192 after closing at Rs 178.25 on Thursday.
"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," Deepak S. Parekh, Chairman, 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," Vibha Padalkar, Managing Director & CEO, HDFC Life said.
Rajan B. Raheja, Vice Chairman, Exide Industries and Chairman, Exide Life 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."
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
Review: Edelweiss Tokio Life’s Total Protect Plus
Moneylife Digital Team 03 September 2021
Edelweiss Tokio Life has launched a new term life insurance called Total Protect Plus. The pure-risk insurance plan provides life cover up to age 100 years, including a host of optional riders to enhance the cover.
Bumper to Bumper Car Insurance: Is There Any Policy Available?
Venkatachari Jagannathan (IANS) 31 August 2021
Suspense continues on whether vehicle-buyers will have to shell out a huge amount towards insurance premium upfront for five years from Wednesday onwards to comply with the Madras High Court's order.
As things stand now,...
Retirement Planning: Is Saral Pension Plan Worth It for Long-term Income?
Moneylife Digital Team 27 August 2021
Earlier this year, the insurance regulator announced a standard pension product called Saral Pension. The standard pension plan is mandated to be offered by all life insurers who sell pension products. Anyone of age 40 years to 80...
Free Helpline
Legal Credit