Exide Industries’ stock jumps 14% after selling its life insurance business to HDFC Life.
HDFC Life, on the other hand, was down 4% at Rs 728.55 on the BSE due to profit booking.
Exide Share price: Exide Industries’ stock soared 14 cent to Rs 202.95 in early morning exchanges after the company sold its full share in Exide Life Insurance Company to HDFC Life Insurance Company for Rs 6,687 crore.
Exide Industries’ Exide Life Insurance Company is a completely owned subsidiary.
On the other hand, profit booking caused HDFC Life to fall 4% to Rs 728.55 on the BSE. On Thursday, the stock reached a new high of Rs 775.65. Until yesterday, the stock had risen 14% in the previous nine trading days.
At their respective meetings today, the boards of directors of HDFC Life, Exide Industries, and Exide Life authorised the transaction involving the sale of Exide Life Insurance to HDFC Life.
Exide Industries will sell HDFC Life a 100 cent investment in Exide Life Insurance in exchange for 87 million shares at Rs 685 per share and a cash distribution of Rs 726 crore, totaling Rs 6,687 crore.
Following the completion of the acquisition, the process for merging Exide Life with HDFC Life will begin. In a joint news release, these companies stated that the entire process, including the acquisition and eventual merger, is subject to regulatory and other approvals. CLICK HERE TO SEE THE BSE RELEASE
“The proposed transaction will help HDFC Life’s Agency business grow faster. Exide Life supports HDFC Life’s geographic reach by having a significant presence in South India, particularly in Tier 2 and 3 cities, allowing access to a larger market.
Customers will benefit from a more comprehensive product offering, a larger distribution network, and more service touch points.
Synergies to increase shareholder value through operating leverage and product mix optimization, with the potential to improve new business margins “According to the company.
Furthermore, a high-quality, mostly traditional and protection-focused business will add roughly 10% to HDFC Life’s existing embedded value. Exide Life’s embedded value as of 30 June 2021 is Rs 2,711 crore, according to Willis Towers Watson Actuarial Advisory LLP.
According to the company, HDFC Life’s scale, market-leading technology and product innovation capabilities, and prudent risk management strategy would help the acquired business optimise costs and generate higher margins over time.