HDFC Life Insurance announced on Friday that its board of directors had acquired 100% of the share capital of Exide Life Insurance Company Limited for a total of. approved ₹6,687 crore. HDFC Life shares traded over 1% lower than ₹745 per share on BSE in Friday’s opening deals, while Exide Industries’ is up 10%.
Here are the details of the planned takeover in 10 points:
- The life insurance company will acquire 100% of the shares in Exide Life from Exide Industries by issuing 8,70,22,222 shares at an issue price of. acquire ₹685 per share and a cash payment of ₹726 crore aggregated to ₹6,687 crore.
- The process of merging Exide Life with HDFC Life will begin after the acquisition is complete.
- Exide Life’s embedded value as of June 30, 2021 is ₹2,711 crore and has been reviewed by Willis Towers Watson Actuarial Advisory LLP, HDFC Life said.
- HDFC Life’s size, market leading digital and product innovation capabilities, and prudent risk management strategy will help optimize costs and generate higher margins on the acquired business over time, it added.
- HDFC Life also added that the proposed transaction will accelerate the growth of its agency business and strengthen other distribution channels such as brokerage, direct and credit union banks.
- In addition, a high quality, mostly traditional, and protective business will add approximately 10% to the existing embedded value of HDFC Life.
- The company expects Exide Life’s strong presence in South India, particularly in Tier 2 and Tier 3 cities, to provide access to a broader market.
- The entire process, including the acquisition and subsequent merger, is subject to appropriate regulatory and other approvals.
- HDFC Life said customers will benefit from a wider range of products, a wider distribution network and more service touchpoints.
- Synergies are expected to increase shareholder value with the potential to improve new business margins through operational leverage and optimization of the product mix.
Commenting on the proposed transaction, Deepak Parekh, Chairman of HDFC Life: “This is a landmark transaction, the first of its kind in the Indian life insurance sector. It would improve insurance penetration and support our goal of providing financial protection to a wider customer base. “
“We believe that this merger can create value for customers, employees, shareholders and sales partners. It gives us the opportunity to realize synergies from complementary business models and further strengthen our in-house sales network, “said Vibha Padalkar, MD & CEO, HDFC Life.
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