ICICI Lombard General Insurance and Bharti AXA General Insurance have signed definitive agreements to combine their insurance businesses through a share swap deal. The completion of this deal would result in the emergence of the country’s third-largest general insurance entity.
Bharti Enterprises currently owns a 51% stake in Bharti AXA General Insurance and the French insurer AXA owns a 49 % stake. As per the share exchange ratio recommended by independent valuers, Bharti AXA shareholders will receive 2 shares of ICICI Lombard for every 115 shares of Bharti AXA held by them. They will receive the shares when the scheme of arrangement is approved by the board of directors of ICICI Lombard and Bharti AXA.
At present, promoter ICICI Bank Ltd holds 51.89% stake in ICICI Lombard, while the rest is with the public. After the proposed deal, the promoter stake will come down to 48.11%.
As a part of the deal, shareholders of the demerged company (i.e.) Bharti and AXA will be allotted equity shares of the combined entity of Rs10 each with Bharti shareholders receiving 18.23 million shares and AXA receiving 17.52 million shares.
ICICI Lombard is a listed insurance firm, and Bharti and AXA will be public shareholders in the combined entity after the deal.
According to a Press Release, the proposed merged non-life insurance company is expected to earn a total annual premium of at least Rs.16,447 crore on a combined basis with a market share of around 8.7%.
ICICI Lombard has said that this deal will create an opportunity for the combined entity to leverage Bharti AXA’s growing distribution platform through existing partnerships and augmentation of agency force.
The proposed agreement is subject to regulatory approvals from the Insurance Regulatory and Development Authority of India, Competition Commission of India, Reserve Bank of India, Securities and Exchange Board of India, National Company Law Tribunal and approval of shareholders of ICICI Lombard and Bharti AXA.
ICICI Lombard has also added that they are expected to gain from an enhanced product suite and deeper customer connect touch points through this Acquisition. They have also stated that the employees of the combined business will also benefit via greater opportunities across functions and geographies.
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