HDFC Life today announced acquisition of 100 per cent stake in Exide Life Insurance and its subsequent merger with HDFC Life for Rs 6,687 crore.
HDFC will issue 8,70,22,222 equity shares at an issue price of Rs 685 per share. The deal also involves cash payout of Rs 726 crore. The entire process is subject to obtaining the relevant regulatory and other approvals.
Following the development, shares of Exide Industries surged 14 per cent to Rs 202.95 on Friday, before trading at Rs 192.20 at 10 am. The scrip had settled at Rs 178.25 on Thursday.
HDFC Life Insurance company shed 4 per cent to 728.55, before trading at Rs 739.95. BSE Sensex was trading 225.09 points, or 0.39 per cent, higher at 58,077.63 at the same time.
According to the statement, the proposed transaction will accelerate the growth of the agency business of HDFC Life as well as strengthen other distribution channels including broker, direct and co-operative banks.
With this acquisition, HDFC Life expects to gain a strong foothold in south India, especially in Tier-II and Tier-III locations.
Also, the move will provide customers with a stronger product suite, wider distribution network and more service touch points.
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, HDFC Life said.
Commenting on the proposed transaction, Deepak 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.”
