HDFC Life said on Friday it will acquire Exide Life Insurance, the life insurance unit of battery maker Exide Industries, in a deal worth ₹6,687 crore.
Shares of HDFC Life were trading over 1% lower to ₹745 per share on the BSE in Friday’s opening deals whereas that of Exide Industries surged 10%.
“The board of directors of HDFC Life Insurance Company (HDFC Life), Exide Industries Ltd (Exide Industries) and Exide Life Insurance Company Ltd (Exide Life)… approved the transaction involving the sale of Exide Life Insurance to HDFC Life,” HDFC Life said in a release.
The process for merger of Exide Life into HDFC Life will be initiated on completion of the acquisition. The embedded value of Exide Life, as on 30th June 2021, is ₹2,711 crore and has been reviewed by Willis Towers Watson Actuarial Advisory LLP, HDFC Life said.
The proposed transaction will accelerate the growth of Agency business of HDFC Life as well as strengthen other distribution channels including Broker, Direct and Co-operative Banks, HDFC Life said.
Besides the acquisition will provide complementary geographical presence with a strong foothold in South India, especially in Tier 2 and Tier 3 locations, it said.
It added that customers will to benefit from stronger product suite, wider distribution network and more service touch points.
The synergies will enhance shareholder value with potential to improve new business margins via operating leverage and product mix optimisation, it added.
“We believe that transaction can result in value creation for customers, employees, shareholders and distribution partners. This transaction will provide an opportunity for HLIC and the target to realise synergies arising out of complementary business models,” HDFC Life said in a stock exchange filing.
“The proposed transaction will give customers access to a wider bouquet of products and service touch points. Employees and agents will benefit from a larger, stronger organisation that realises the synergies arising out of complementary business models built on similar ethos. 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.” HDFC Life added.
“This transaction is testimony to the reputation that Exide Life Insurance has built of being a well-managed company. We look forward to working closely with the HDFC Life team on the proposed transaction. Being part of one of India’s most respected life insurance companies will certainly benefit our customers, employees, agents and partners,” said Kshitij Jain, MD & CEO, Exide Life Insurance Company.