HDFC Life Insurance has announced that its board has approved the acquisition of 100 per cent of the share capital of Exide Life Insurance Company Limited for a total consideration of Rs 6,687 crore. Shares of HDFC Life were trading over 1 per cent lower to Rs 745 per share on the BSE in Friday’s opening deals, whereas Exide Industries surged 10 per cent.

Here are some details:

• The life insurance company will acquire a 100 per cent stake in Exide Life from Exide Industries through the issuance of 8,70,22,222 shares at an issue price of Rs 685 per share and a cash payout Rs 726 crore aggregating to Rs 6,687 crore.
• The merger of Exide Life into HDFC Life will be initiated on completion of the acquisition.
• The embedded value of Exide Life, as of 30th June 2021, is Rs 2,711 crore and has been reviewed by Willis Towers Watson Actuarial Advisory LLP, HDFC Life said.
• HDFC Life’s scale, market-leading digital and product innovation capabilities and prudent risk management strategy will aid in optimizing cost and, over time, achieve higher margins for the acquired business, it added.
• HDFC Life further added that the proposed transaction would accelerate the growth of its agency business, as well as strengthen other distribution channels, including Broker, Direct and Co-operative Banks.
• Further, a good quality, predominantly traditional and protection-focused business will augment the existing embedded value of HDFC Life by approximately 10 per cent.

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.”

“We believe that this amalgamation can result in value creation for customers, employees, shareholders and distribution partners. It gives us an opportunity to realise synergies arising out of complementary business models, and further bolster our proprietary distribution network,” said Vibha Padalkar, MD & CEO, HDFC Life.