L&T General Insurance, a unit of engineering and construction conglomerate Larsen & Toubro, is set to merge with the Indian unit of Future Generali India Insurance.

Larsen & Toubro, Generali Group and the Future Group (Pantaloon Retail) have entered in to an agreement for the merger of the two companies in India. The companies have signed a non-binding term sheet for the merger of the insurance sector firms. Following the merger, L&T will hold 51 per cent stake, Generali will hold 26 per cent stake and the remaining 26 per cent will be held by the Future Group.

Pantaloon Retail (India) had earlier said that it has entered into a share purchase agreement to sell its stake in insurance business. Even as Larsen & Toubro has not announced the value of the deal, it is believed that 51 per cent stake in the merged entity would be valued at around Rs. 560 crore.

"The completion of the transaction is subject to satisfactory due diligence by both the parties, execution of mutually agreed definitive binding documents and requisite approvals from Irda and other regulators and related corporate bodies," , L&T said in a statement.