Paris:
The much expected merger of Bharti Axa General Insurance with ICICI Lombard General Insurance, India's largest non-life company has got formalised in an all-stock deal, valued at €521 million(approximately Rs 4,200 crore).
The merger has been announced by AXA in Paris on Friday evening. The tarnsaction is subject to customary closing conditions, including the receipt of regulatory approvals, and is expected to close by 4Q 2021, said AXA..
AXA, with 49 per cent of stake and Bharti, with 51 per cent of stake, to combine their non-life operations in India into ICICI Lombard, in exchange of shares, said Axa.
The shareholders of Bharti AXA will receive two shares of ICICI Lombard for every 115 shares of Bharti AXA held by them as on the date as the scheme of arrangement is approved by the board of directors of ICICI Lombard and Bharti AXA.
Under the terms of the agreement, AXA and Bharti will receive a total of 35.8 million shares of ICICI Lombard on closing, which would represent Euro 521 million at current market value, and an implied HY 2020 P/BV4 multiple of more than five times. The transactionis expected to result in an one-time positive net income of approximately Euro 0.2 billion in AXA Group’s FY 2021 consolidated financial statements,said AXA..
Bharti wil get 1,82,35,659 equity shares whie AXA will receive 1,75,20,535 equity shares. There are no special rights being granted to Bharti or AXA, upon effectiveness of the Scheme, in their capacity as shareholders of the ICICI Lombard General Insurance. Both Bharti and AXA , whose combined share holding will over 8 per cent in the ICICI Lombard ,will be categorized as public shareholders of the company.
Post merger ICICI Bank's holding in ICICI Lombard General will slightly fall from 51.89 per cent to 48.11 per cent while the public shareholdig in the company will go up from 48.11 per cent to 51.89 per cent. ICICI Lombard General is expected to earn a total annual premium of at least ₹16,447 crore on a combined basis with market share of around 8.7%. .
propel the combined entity as the third largest non-life insurers in India, with a market share of 8.7%.
Through this acquisition deal, ICICI Lombard will be able to augment its distribution strength with Bharti AXA’s existing distribution partnerships. The combined entity will also benefit from continued partnerships with Bharti Enterprises, one of India’s leading business groups with diversified interests, and AXA, a large well-reputed global insurer, said ICICI Lombard.General Insurance.
Bhargav Dasgupta, MD & CEO of ICICI Lombard General Insurance said, “This is a landmark step in the journey of ICICI Lombard and we are confident that this transaction would be value accretive for our shareholders. We are excited by the capabilities and strengths that Bharti AXA will add to our franchise. We would also like to reassure Bharti AXA’s policyholders and channel partners of seamless business continuity and maintaining highest standards of customer service.”
Transaction Advisors:
Ernst & Young LLP (EY) acted as the exclusive M&A advisor to ICICI Lombard.AZB & Partners acted as the legal advisor to ICICI Lombard. Cyril Amarchand Mangaldas acted as legal advisor to Bharti and Talwar Thakore & Associates acted as legal advisor to AXA.
BDO Valuation Advisory LLP and MKSA & Associates recommended the share exchange ratio for the demerger of Bharti AXA into ICICI Lombard. Ernst & Young Merchant Banking Services LLP provided fairness opinion to the Board of ICICI Lombard.