Direct Line agrees £3.7bn Aviva takeover
Direct Line’s board has agreed to accept Aviva’s £3.7bn takeover of the insurer, bringing to an end the firm’s run as an independent company.
In a stock exchange announcement this morning, Direct Line’s board endorsed Aviva’s latest £3.7bn offer for the business.
Under the terms of the deal, shareholders will receive 0.2867 Aviva shares, along with 129.7p in cash and a dividend of up to 5p a share.
The offer values Direct Line at a 73 per cent premium to its closing price on 27 November, when bidding began, or 49.7 per cent higher than its six month average share price.
Direct Line shareholders will own about 12.5 per cent of Aviva when the deal is completed.
While Direct Line rebuffed Aviva‘s initial bids, it said earlier this month it was likely to endorse a definite offer for at least £3.6bn.
“This deal is excellent news for the customers and shareholders of Aviva and Direct Line,” said Direct Line’s CEO Amance Blanc today.
“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.”
The news comes after Direct Line rejected two takeover attempts from the Belgian insurance giant Ageas this year, with most recent valuing the firm at £3.1bn.
If approved by shareholders at a vote in March, Aviva’s takeover will become effective in mid-2025.
“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,” added Direct Line chair Danuta Gray.
“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.”