HDFC Life signs merger deal with Max Life

HDFC and Max Life insurance have finally joined hands on Monday successive to their amalgamation talks earlier this year.

The Board of Directors of the Corporation at its meeting on August 8, 2016, approved the entering into definitive agreements for amalgamation of business between the above entities through a composite Scheme of Arrangement ("Scheme"). 

Proposed Transaction creates a Rs 255 billion annual premium 'company1,' with scale, differentiated portfolio and wider reach to expand in a growing life insurance sector.

"As a part of the proposed transaction, the life insurance business of Max Financial, currently held through Max Life, would be finally amalgamated with HDFC Life and all other business of Max Financial would be finally amalgamated into Max India Limited," the company said in a joint statement. 
 

As per the agreed valuation and exchange ratio, the relative valuation of HDFC Life and Max Life would be 69% and 31% respectively. 

The shares of HDFC Life are proposed to be listed on BSE Limited and the National Stock Exchange of India Limited as a consequence of the Scheme. 

The shareholding of the Corporation in HDFC Life post completion of the proposed transaction would be 42.5% and consequently HDFC Life would cease to be a subsidiary of the Corporation.

Way forward for the merger comprises of a three-step process as per the company’s joint statement.

1.    Max Life merges into Max Financial. Shareholders of Max Life will get one share of Max Financial for every 4.98 shares they hold in the insurer.

2.    The insurance unit is separated from the merged entity in step 1 and folded into HDFC Life. Shareholders of the new merged Max Financial get 2.33 shares of HDFC life per share.

3.    The non-insurance rear of Max Financial merges with Max India.