HDFC Standard Life- Max Life merger talks:
5 facts about the deal that may create India’s largest private insurer..Archana Singh
Finally, Max Life Insurance group entities and HDFC Standard Life Insurance Company have decided to merge to form the largest private sector insurance company that is set at a market value of Rs. 65,000 crore. This is a ‘complex deal’ that includes four companies, that comes with a swap ratio of 3:7 along with Max Financial Services shareholders plus a fee payment of almost Rs. 800 crore.
As per the deal, shareholders of Max Financial Services will acquire seven shares of HDFC Life at intervals of three years of Max Financial. A look at Max Life company profile and reviews will tell you about the significant features of the company. After Max Life Insurance, this new merger reflects on 5 facts related to the deal.
The 5 facts Associated with the ‘Complex Deal’
1. According to the deal, the merged entitle ensures a premium of approximate Rs. 25,500 crore plus, assets that come under management are valued at Rs. 110,054 crore. According to HDFC, the boards of Max India, HDFC Life, Max Financial Services and Max Life Insurance Co approved the definite agreements for the merger of business by means of a composite scheme of arrangement.
2. On the basis of agreed commercials, the relative estimation of Max Life and HDFC Life is 69 and 31 percent, respectively. Both the parties have agreed for deal of non-solicitation and non-compete agreement with a tenure of four years. This deal with come with an upfront payment of Ts. 501 crore which is payable immediately after the end of merger. This followed by three annual installments with an equal payment of Rs. 349 crore to the maximum. This payment will be completed by the merged company from those of shareholders’ account.
3. As per terms and norms of the proposed transaction, Max Financial will amalgamate with Lax Life. After this, Max Financial will then demerge life insurance business in HDFC Life. Once this done, Max India will merge with Max Financial and then will finally amalgamate into Max India Limited.
4. News has it, HDFC Chairman Analjit Singh will stay as the supportive shareholder of this new merged entity. Therefore, HDFC’s stake in this new merged entity will slash down to 42.5 percent, while the stake of Standard Life will go down to 24 percent. Also, there are possibilities that the stake of Standard Life will increase to 25 percent in the next three to six months. As per more information, Max Sponsors will occupy 6.5 percent in the merged deal. On the other hand, the remaining stake will be acquired by Mitsui Sumitomo Insurance plus other players. More information has it that Standard Life and HDFC Ltd will be the promoters of the complex deal.
5. Under Max Life company profile and reviews, the merged entity will hold a market share of 3.85 percent in the group sector and 10.8 percent in the individual sector. This proposed transaction will require approval by a great number of shareholders plus voting by shareholders of Max Financial Services, Max Life, HDFC Life and Max India. However, this closing transaction will be open to conditions including regulatory approvals as proposed by Development Authority of India, Insurance Regulatory, Competition Commission of India, High court, Services and Exchange Board of India and the stock exchanges.
Earlier, Max groups and HDFC had wanted to merge Max Financial and Max Life Insurance into HDFC Life. However, IRDAI regulator expressed concerns over the scheme of arrangement regarding transfer of liabilities, etc. Therefore, Max Life company profile and reviews suggest that this complex merger will prove worthy of the initiative and investment.