HDFC Life to acquire Exide Life
HDFC Life Insurance Company Limited (HDFC Life) on Friday announced the acquisition of Exide Life Insurance Company Limited (Exide Life) from Exide Industries Limited for Rs 6,687 crore. The process of merger of Exide Life with HDFC Life will be initiated upon completion of the acquisition. The entire process, including the acquisition and subsequent merger, is subject to obtaining relevant regulatory and other approvals. The deal was approved by the boards of three companies on Friday morning.
The total cost will be met by HDFC Life by issuing 8,70,22,222 shares on a preferential basis to Exide Industries at a price of Rs 685 per share and cash amounting to 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 30 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.
After the merger of Exide Life with HDFC Life, the latter’s shareholding pattern will be – HDFC Ltd 47.9 per cent, Exide Industries 4.1 per cent and others 48 per cent.
As a justification for the acquisition, HDFC Life said, the proposed transaction would accelerate the growth of its agency business.
With a net worth of Rs 1,481.42 crore, revenue of Rs 4,937.46 crore Exide Life complements HDFC Life’s geographic presence and has a strong foothold in South India, especially in Tier 2 and 3 cities, thus providing a wider market reach. does.
In addition, Exide Life’s predominantly traditional and security-focused business will increase the existing embedded value of HDFC Life by about 10 per cent. As on June 30, 2021, Exide Life had 36,710 agents.
Meanwhile, HDFC Life’s share price declined after opening at Rs 742 on Friday after the deal was announced. The closing price of the stock was Rs 758 on the previous day. At the same time, shares of Exide Industries closed with a gain of up to Rs 192 after closing at Rs 178.25 on Thursday.
HDFC Life Chairman Deepak S. “This is a historic first of its kind transaction in the Indian life insurance sector. This will increase the reach of insurance and further our objective of providing financial protection to a wider customer base,” Parekh said.
Vibha Padalkar, Managing Director and CEO, HDFC Life said.
Rajan b. Raheja, Vice Chairman, Exide Industries and Chairman, Exide Life, said, “Exide Industries has always been focused on enhancing value for its stakeholders. The proposed transaction is another step taken by Exide to fulfill the above objective.”
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