MUMBAI:  In a statement, HDFC Life Insurance (HDFC Life) has said it will acquire a 100 per cent stake in Exide Life Insurance (ELI) from Exide Industries for a cash payout of Rs 726 crore and the remaining by issuing 8,70,22,222 equity shares at a price of Rs 685 per share.

"HDFC Life will acquire 100 per cent stake in Exide Life Insurance from Exide Industries via 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 company said further adding that subject to regulatory approvals, ELI would be subsequently merged with itself.

This marks one of the first and largest acquisitions in the life insurance segment, which has 23 private players and a State-owned insurer – Life Insurance Corporation of India (LIC). Previously, HDFC Life had intended to acquire Max Life, but the deal did not go through because of regulatory hurdles. Experts said that this deal, however, is not expected to face any such regulatory hurdles. 

Reliance Capital, a subsidiary of the Anil Dhirubhai Ambani Group, had acquired the entire stake in AMP Sanmar from Australian insurer AMP and the Sanmar Group in October 2005 for a little over Rs 100 crore. HDFC Life’s proposed acquisition will mark the first purchase in the past 16 years in the life insurance segment.  

After the acquisition, EIL will hold a 4.1 per cent stake in HDFC Life, and mortgage lender HDFC, which holds a 49.9 per cent stake in HDFC Life, will see its stake coming down to 47.9 per cent. 

HDFC Life said, "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-II and-III towns, thus providing access to a wider market."