ICICI Lombard-Bharti AXA GI merger: Investors await deal value

The general insurance major ICICI Lombard announced that it is all set to acquire Bharti AXA General Insurance. The synergy of the acquisition is considered to make one of the third largest general insurance companies in India. Though, the stock price fallen consistently since the announcement of the merger.

The management of ICICI Lombard in its statement said that the proposed transaction would not need the requirement of additional funds for the transaction. At the end of the transaction, Bharti and AXA group, respectively, would have nearly 7 per cent stake in ICICI Lombard. This depicts that ICICI Lombard would issue a fresh share of both companies.

As far as the structure of the deal is concerned, 3,57,56,194 shares of ICICI Lombard would be issued to Bharti and AXA Groups. The swap ratio proportion has been decided as Bharti AXA would get 2 shares of ICICI Lombard for 115 shares of Bharti AXA GI. The opportunity of the combined entity, which can leverage Bharti AXA’s growing distribution platform through its partners and agents, is considered as one of the major outputs of this transaction.

Interestingly, the management in a conference call held for the discussion of the acquisition, mentioned that Bharti AXA made a loss of Rs 240 crore in FY20. This can be considered as one of the reasons why the stock price is not cheering on the announcement of the transaction. Further, the exact deal value is also not mentioned as of yet.

The stock price fell 1.5 per cent on BSE as against 0.12 per cent gain in the benchmark index-Sensex.