Aviva agrees £3.7bn takeover of Direct Line - what it means for your insurance policy
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Insurance giant Aviva has confirmed a £3.7bn takeover of competitor Direct Line, after an initial £3.3bn bid was rejected in November. The FTSE 100 company managed to agree deal following intense negotiations leading up to Christmas Day. This merger is set to create a powerhouse in the motor insurance market, with the combined entity expected to command over 20% of the UK sector.
Aviva's chief executive Amanda Blanc hailed the acquisition as "excellent news" for customers of both firms. "Aviva and Direct Line share a deep commitment to excellence in looking after customers and this will remain a top priority following the acquisition," she commented. "The financial strength and scale of the combined group means customers will benefit from competitive pricing, an enhanced claims experience and even better service.".
Under the terms of the agreement, Aviva will pay 129.7 pence in cash plus 0.2867 of its own shares for each Direct Line share, along with up to 5p per share in dividend payments to Direct Line shareholders. Post-merger, Aviva shareholders are set to hold around 87.5% of the new entity, while Direct Line shareholders will have a 12.5% stake. Shareholders are scheduled to vote on the transaction in March, with the aim of finalising the merger by mid-2025.
Direct Line's chairwoman Danuta Gray remarked that the deal "reflects the attractiveness of Direct Line". The board of Direct Line has expressed their satisfaction with the performance of CEO Adam Winslow, who joined the struggling insurance firm in March with a mission to turn its fortunes around. However, an offer on the table provides shareholders with an opportunity to "realise the value of their investment in the near term".
