Direct Line’s board has given the green light to Aviva’s £3.7bn takeover bid, marking the end of Direct Line’s tenure as an independent insurer.
The agreement, announced in a stock exchange statement this morning, comes after a series of negotiations that began in late November.
The takeover offer comprises 0.2867 Aviva shares per Direct Line share, 129.7p in cash per share, and a dividend of up to 5p per share.
This package values Direct Line at a significant premium, 73% above its closing price on 27 November 2024 and 49.7% higher than its six-month average share price. Upon completion of the deal, Direct Line shareholders will hold approximately 12.5% of Aviva.
The path to this agreement was not straightforward. Direct Line initially rebuffed Aviva’s early bids, but earlier this month, the company indicated it would likely endorse an offer of at least £3.6bn.
Prior to this, Direct Line had rejected two takeover attempts from Belgian insurance giant Ageas, with the most recent valuing Direct Line at £3.1bn.
Amance Blanc, Direct Line’s Ceo, SAID: “This deal is excellent news for the customers and shareholders of Aviva and Direct Line.
“It builds on our track record of delivering four years of strong financial performance and, in line with our strategy, it accelerates our growth in capital light business.”
Danuta Gray, Direct Line Chair, said: “The board of Direct Line has been very pleased with the progress made by its new management team, but Direct Line is in the early stages of an extensive turnaround, and it believes the offer allows Direct Line shareholders to realise the value of their investment in the near term.
“Direct Line’s customers and employees will be joining an established, successful business with a wide array of insurance products that is well-placed to deliver for all its stakeholders.”
The offer allows shareholders to realise the value of their investment in the near term. Gray also highlighted that Direct Line’s customers and employees will join an established, successful business with a wide array of insurance products.
Shareholders will vote on the takeover in March 2025. If approved, the deal is expected to become effective in mid-2025.
This acquisition represents a significant shift in the UK insurance landscape, combining two major players and potentially reshaping the competitive dynamics of the industry.
