Aviva lifts offer for rival insurer Direct Line to £3.4bn - 4.4% higher than its original rejected bid
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Aviva has raised its bid for rival insurer Direct Line to £3.4bn days after its initial offer was rejected. The FTSE 100 firm has upped its offer to 261p for each Direct Line share, 4.4 per cent higher than its original bid of 250p. Deliberations are ongoing and there is no certainty Direct Line bosses will accept the new bid, Bloomberg reported.
Direct Line shares dipped in late trading in London after reports of the increased offer emerged, with investors in ‘wait-and-see’ mode. They closed the day down 0.34 per cent, or 0.8p, to 236p. Aviva was up 1.87 per cent or 9p at 489.4p. Direct Line and Aviva declined to comment.
Takeover target: Aviva has upped its offering to 261p for each Direct Line share, 4.4% higher than its original bid of 250p. Aviva shocked markets last week when it revealed it had approached Direct Line with a £3.3billion offer made up of a mixture of cash and shares.
The bid was rejected out of hand by the troubled insurer, which said it was ‘highly opportunistic and substantially undervalued the company’. But it has sparked speculation of a Christmas bidding war, with Aviva now contacting Direct Line shareholders direct in an apparent attempt to pave the way for a hostile takeover.
Some have predicted Aviva may need to increase its bid further, possibly to £3.9billion, to get the deal over the line. Under City takeover rules, Aviva has until 5pm on Christmas Day to decide whether it wishes to make a formal offer for Direct Line or walk away.
