HDFC Life on Friday announced the acquisition of 100 percent of the share capital of Exide Life Insurance Company for Rs 6,687 crore.
Of this, Rs 725.97 crore will be payable in cash and the balance by way of issue 8.70 crore equity shares at a price of Rs 685 per share to Exide Industries Ltd.
The process for the merger of Exide Life into HDFC Life will be initiated on completion of the acquisition.
"The proposed transaction will give customers access to a wider bouquet of products and service touchpoints. Employees and agents will benefit from a larger, stronger organisation that realises the synergies arising out of complementary business models built on similar ethos," HDFC Life said in a statement.
"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 added.
The embedded value of Exide Life, as on June 30, 2021, is Rs. 2,711 crore and has been reviewed by Willis Towers Watson Actuarial Advisory LLP.
The closure of the proposed transaction will inter alia be subject to approval by relevant regulators including the Insurance Regulatory and Development Authority of India (IRDAI), Competition Commission of India (CCI), National Company Law Tribunal (NCLT), stock exchanges and approval by the shareholders of HDFC Life and Exide Industries, HDFC Life said.
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.”