LONDON – Aviva (LON:) PLC has proposed to acquire Direct Line (LON:) Insurance Group PLC, as confirmed by a non-binding proposal submitted on November 19, 2024. The offer, which Direct Line’s Board has rejected as undervaluing the company, comprised 112.5 pence per Direct Line share in cash and 0.282 new Aviva shares for each Direct Line share.
This proposal valued Direct Line shares at 250 pence each, marking a significant premium over recent closing prices, including a 59.7% increase from the price on November 18, 2024, the day before the proposal was made. Despite the premium, Direct Line’s Board declined to engage further with Aviva on November 26, 2024.
Aviva’s potential acquisition aligns with its strategy to grow its UK businesses and shift towards capital-light operations. The company has reported a 26% growth in UK Personal Lines premiums year-to-date as of their Q3 2024 update, with a notable 43% growth in Retail. Aviva believes that the acquisition would not only bring about cost and capital synergies but also provide Direct Line shareholders with the opportunity to benefit from Aviva’s scale and financial strength.
The proposed acquisition would expand Aviva’s presence in the UK Personal Lines market, creating a more efficient platform to serve both existing and new customers and allowing Direct Line customers to enjoy the benefits of Aviva’s offerings.
Aviva has until 5:00 pm on December 25, 2024, to either announce a firm intention to make an offer in accordance with Rule 2.7 of the City Code on Takeovers and Mergers or to declare that it does not intend to make an offer. The company retains the right to adjust the terms of the proposal or introduce different forms of consideration. Any firm offer would be subject to customary conditions, including regulatory approvals and due diligence.
The information for this article is based on a press release statement. There is no certainty that Aviva will proceed with the offer, and a further announcement will be made if and when appropriate.
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