HDFC Life to acquire Exide Life for Rs 6,687 crore; scrip slips 2%

Share of HDFC Life were trading lower by 2.05% or Rs 15.55 to Rs 743.45 per share in early trades of Friday after the company announced that its board has approved the acquisition of 100% of the share capital of Exide Life Insurance Company for a total consideration of Rs 6,687 crore. HDFC Life will will acquire 100% 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 of Rs 726 crore aggregating to Rs 6,687 crore.

The acquisition will add approximately 40% to the topline of HDFC Life Agency (based on FY21 nos.) and 36,700+ agent base as of 30th June, 2021. That apart it will also get access to South India, where Exide Life has a strong presence especially in Tier 2 and Tier 3 locations.

The acquisition will enable a stronger product suite, wider distribution network and more service touchpoints for the customers. Whereas the shareholders will benefit from the synergies by merging of both business as they will lead to improve new business margins via operating leverage and product mix optimisation.

Management comments

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.

The entire process, including the acquisition and subsequent merger, is subject to obtaining the relevant regulatory and other approvals.