NEW DELHI: Shares of Apollo Hospitals Enterprise jumped nearly 4 per cent after HDFC agreed to acquire its entire 50.8 per cent stake in Apollo Munich Health Insurance.Mortgage major HDFC Wednesday agreed to acquire Apollo Hospitals Group's entire 50.8 per cent stake in Apollo Munich Health Insurance for Rs 1,336 crore and also the 0.4 per cent stake held by a few employees for Rs 10.84 crore.
The deal, valued at Rs 1,347 crore, and subject to regulatory and shareholder approvals, is likely to be closed over the next nine months.
The merged entity (with HDFC Ergo General Insurance) will be a Rs 10,807-crore business as of today's individual business, making it the second largest, PTI reported.At Rs 1,336 crore or Rs 73 a share, the deal gives over four-times premium to the Reddys, the promoters of the Apollo Hospitals group which had invested Rs 300 crore into the joint venture since 2006.
Global brokerage CLSA said this acquisition will help HDFC Ergo deepen its presence in the health insurance space and synergies and cost-savings post-merger will be key to improve profitability.Macquarie thinks the timely announcement of the insurance stake sale is a key positive for Apollo Hospitals.
The brokerage expects a Rs 1,200 crore net inflow to promoters after the stake sale.It also expects the lowering of promoter pledges by at least 50 per cent.
Shares of Apollo Hospitals Enterprise traded 1.17 per cent up at Rs 1,368 while those of HDFC were 0.64 per cent up at Rs 2,192.25 on BSE around 9:40 am.