HDFC Life shares fall 4% after firm announces acquisition of Exide Life

the stock hit a low ₹728.55 on BSE. at 12.05 pm, was on the stock ₹734.05 on the BSE, down 3.3% from the previous close. HDFC Life stock was trading higher for more than nine consecutive sessions and gained nearly 14% during the period.

Meanwhile, the shares of Exide Industries Ltd rose 7.2%. ₹191 per share.

HDFC Life had earlier intended to acquire Max Life, but the deal did not materialize due to regulatory hurdles.

HDFC Life will acquire 100% stake in Exide Life Insurance from Exide Industries at the issue price by issuing 87.02 million shares. ₹685 per share, and paid in cash ₹725 crore, it said.

The process of merger of Exide Life with HDFC Life will be initiated after the completion of the deal.

The largest insurance deal in the country could spur further consolidation in the sector, which has about 57 firms, including two dozen life insurance companies. The government’s move earlier this year to allow foreigners to own more local insurance companies, and increased demand for medical and life coverage after the pandemic in the country, prompted large firms to seek more such transactions. likely to do.

Santosh Singh, Senior Vice President and Head of Research, Motilal Oswal Asset Management Company said, “Life insurance is a fixed cost intensive business and requires size, distribution network and high operating levels to ensure profitability.” This is the reason why smaller size players are not able to cope with the market.”

HDFC Life will hold an extraordinary general meeting on September 29 to seek approval from its shareholders.

(with inputs from Bloomberg)