- Title:
AGREEMENT WITH MAX FINANCIAL SERVICES LIMITED - Time:
08:37:54 - Date:
28 Apr 2020 - Category:
Acquisitions and alliances - ID:
1366L
AXIS/CO/CS/36/2020-21
28th April 2020
Dear Sir(s),
SUB: AGREEMENT WITH MAX FINANCIAL SERVICES LIMITED
REF: REGULATION 30 READ WITH PARA A OF SCHEDULE III OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 (LISTING REGULATIONS).
This is with reference to our letter no. AXIS/CO/CS/981/2019-20 dated 20th February 2020 on "Confidentiality and Exclusivity Agreement with Max Financial Service Limited".
We wish to inform you that the Board of Directors at its meeting held on Monday, 27th April 2020, has approved entering into an agreement with Max Financial Services Limited (MFSL) to acquire 29% stake in Max Life Insurance Company Limited. The Bank will acquire shares from Max Financial Services and will sign a Shareholders' Agreement and a Share Purchase Agreement in relation to the same.
The said transaction is subject to satisfaction of conditions precedent, including receipt of regulatory approvals from Reserve Bank of India, Insurance Regulatory and Development Authority of India and Competition Commission of India, among others.
The details as required under the Listing Regulations are provided in Annexure A.
The press release in this regard is attached herewith.
http://www.rns-pdf.londonstockexchange.com/rns/1366L_1-2020-4-28.pdf
You are requested to take note of above and arrange to bring the same to the notice of all concerned.
Thanking you,
Yours faithfully,
For Axis Bank Limited
Girish V. Koliyote
Company Secretary
Encl: As above.
Annexure A
Details which a listed entity needs to disclose for the events that are deemed to be material as specified in Para A of Part A of Schedule III of Listing Regulations.
1. Acquisition(s) (including agreement to acquire), Scheme of Arrangement (amalgamation/ merger/ demerger/restructuring), or sale or disposal of any unit(s), division(s) or subsidiary of the listed entity or any other restructuring:
1.1. Acquisition (including agreement to acquire):
| Particulars |
Details |
| a) Name of the target entities, details in brief such as size, turnover etc.; |
Max Life Insurance Company Limited (unlisted entity)
Turnover: 2017 - Rs. 15,774 crores 2018 - Rs. 16,789 crores 2019 - Rs.19,987 crores
|
| b) Whether the acquisition would fall within related party transaction(s) and whether the promoter/ promoter group/ group companies have any interest in the entity being acquired? If yes, nature of interest and details thereof and whether the same is done at "arm's length"; |
The acquisition of stake in Max Life Insurance Company Limited will not fall within the related party transaction. Shares will be acquired from the listed parent entity of the target company i.e. from, Max Financial Services Limited.
The promoter/ promoter group/ group companies do not have any interest in the entity being acquired.
|
| c) industry to which the entity being acquired belongs; |
Life Insurance |
| d) objects and effects of acquisition (including but not limited to, disclosure of reasons for acquisition of target entity, if its business is outside the main line of business of the listed entity); |
To strengthen Bank's position in Life Insurance industry. Banks are allowed to engage in Insurance business. |
| e) brief details of any governmental or regulatory approvals required for the acquisition; |
The said transaction is subject to regulatory approvals from Reserve Bank of India, Insurance Regulatory and Development Authority of India and Competition Commission of India, among others. |
| f) indicative time period for completion of the acquisition; |
6-9 months subject to regulatory approvals. |
| g) nature of consideration - whether cash consideration or share swap and details of the same; |
Cash Consideration |
| h) cost of acquisition or the price at which the shares are to be acquired; |
The purchase price shall be arrived basis the valuation of Max Life conducted as per Rule 11UA read with Rule 11UAA of the Income-tax Rules, 1962 on the date of share purchase. |
| i) percentage of shareholding/control acquired and/or number of shares to be acquired; |
55,64,94,102 shares representing 29% stake in Max Life Insurance Company Ltd |
| j) brief background about the entity acquired in terms of products/line of business acquired, date of incorporation, history of last 3 years turnover, country in which the acquired entity has presence and any other significant information (in brief); |
Line of business: Life Insurance
Date of Incorporation: 11-Jul-2000
Turnover: 2017 - Rs. 15,774 crores 2018 - Rs. 16,789 crores 2019 - Rs.19,987 crores
Country of operation: India |
| k) Significant terms of the agreement (in brief), special rights like right to appoint directors, first right to share subscription in case of issuance of shares, right to restrict any change in capital structure, etc. |
The definitive agreements provide for certain rights with regard to:
· Governance of Max Life including the right of appointment of nominee directors, and affirmative vote rights for the Bank and Max Financial Services Limited (MFSL). Accordingly, MFSL will have the right to nominate 4 (four) directors on the Board of Directors of Max Life ('Max Life Board') and Axis Bank will have the right to nominate 3 (three) directors on the Max Life Board.
· Axis Bank and MFSL intend to create long term value for all shareholders of Max Life by working towards a merger of the Company with Max Life. Should the merger not be completed by a pre-agreed timeline, the parties have contractually agreed on certain other outcomes which are detailed in the transaction documents including the right to swap up Axis Bank's shareholding to Max Financial, tax consequence of which will be equally borne by the parties. ("Value Creation Options"). If the Value Creation Options are not consummated within 63 months from the closing, the transactions provide for a put option for Axis Bank on the Company to sell all shares held by Axis Bank in Max Life at a price of INR 294 per share (subject to adjustments mutually agreed between parties) within 9 months of exercise of such put option.
· Customary rights like minority protection rights for Axis Bank at Max Life level, anti-dilutive provisions, consequences of identified events of default form a part of the inter-se agreements.
|
| l) Any other disclosures related to such agreements, viz., details of nominee on the board of directors of the listed entity, potential conflict of interest arising out of such agreements, etc; |
Upon the closing of the transaction, Axis Bank will have the right to nominate 3 (three) directors and MFSL will have the right to nominate 4 (four) directors on the Max Life Board. One nominee director of the Promoter group on the Board of MFSL shall be a person identified by Axis. |
AGREEMENT WITH MAX FINANCIAL SERVICES LIMITED08:37:5428 Apr 2020Acquisitions and alliances1366L