India-based life insurers HDFC Life Insurance Co. and Max Life Insurance Co. have finalized the terms of their merger, both companies have announced.
The merger is a three-step process, with Max Life first merging with its parent Max Financial Services Ltd. Next, the insurance unit will be separated from the combined entity into HDFC Life. Third, the non-insurance businesses of Max Financial will merge into group company Max India Ltd.
A joint statement by the companies said that the boards of all four firms have given their approval to the deal.
Shareholders of Max Life will get one share of Max Financial for every 4.98 shares of Max Life. Meanwhile, shareholders of Max Financial will get 2.33 shares of HDFC Life for each share held.
The promoters of Max Life, such as Analjit Singh and his family and related firms, will receive US$127m as a non-compete fee from the merged entity. Around 59% will be paid upfront, and the rest will be paid later in three equal yearly instalments.
Housing Development Finance Corp. Ltd and Standard Life (Mauritius Holdings) will be the promoters of the merged entity, HDFC Life.
HDFC will cease to be the holding company of HDFC Life after the merger process and will hold about 42.5% of the merged entity, according to the joint statement.
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