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Japan's Mitsui Sumitomo to acquire 21.87% stake in Max Financial in share swap deal

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Tokyo-based Mitsui Sumitomo Insurance will acquire 21.87 percent stake in Max Financial Services by swapping majority of its shareholding in Max Life Insurance (MLIC), a statement said on Wednesday.

Japan's Mitsui Sumitomo to acquire 21.87% stake in Max Financial in share swap deal
Tokyo-based Mitsui Sumitomo Insurance will acquire 21.87 percent stake in Max Financial Services by swapping majority of its shareholding in Max Life Insurance (MLIC), a statement said on Wednesday.
The board of Max Financial Services Ltd (MFS) has approved a transaction which will allow Mitsui Sumitomo Insurance (MSI) to swap 20.57 percent of its shareholding in Max Life insurance with 21.87 percent stake in MFS, the statement added.
MFS and MSI (a part of MS&AD Insurance Group Holding of Japan) are 73:25 joint venture partners in private life insurer Max Life Insurance Company of the Analjit Singh-promoted Max Group.
This will enable the company to simplify the shareholding structure in its subsidiary and have more flexibility to attract strategic investments in Max Life in the future and yet maintain its significant majority ownership, MFS said in the statement.
As per the transaction structure, MSI will get 75,458,088 shares of MFS at Rs 565.11 per share aggregating to 21.87 percent of the paid-up equity share capital.
In consideration, MFS will receive 394,775,831 shares from MSI at a price of Rs 108.02 per share, translating into 20.57 percent stake of MLIC.
"Pursuant to this, the equity stake held by MFS in Max Life will increase to 93.10 percent. The transaction will lead to a change in MFS' shareholding pattern," it added.
The transaction will also provide MFS with the option to purchase from MSI its balance shareholding in Max Life for cash at a price of Rs 85 per share. The transaction is subject to requisite approvals and is expected to be concluded by June 2020.
"We value MSI as our long term partners in the life insurance business and we are confident that they will continue to provide their expertise and counsel to MFS and Max Life through the board governance mechanism," said Mohit Talwar, MD, Max Financial Services and Vice Chairman, Max Group.
This transaction makes the holding structure simpler and helps consolidate shareholding in Max Life which is expected to benefit all shareholders by attracting more investor interest, Talwar said.