In a recent development, Direct Line Group has rejected a third acquisition offer this year, this time from Aviva, reinforcing its commitment to maintaining independence amidst takeover interest.
The offer, valued at 250p per share, included a cash component of 112.5p and 0.282 new Aviva shares for each Direct Line share. Despite being an improvement over previous bids from Ageas, analysts believe the premium offered was insufficient to meet Direct Line’s valuation expectations.
Aviva’s proposal, which represented a 59.7% premium over the share price prior to the offer, was formally dismissed by Direct Line’s board. Berenberg analysts noted that the impact on Aviva’s solvency from the acquisition offer would likely be limited.
The board deemed the bid as “highly opportunistic” and not aligned with the company’s intrinsic value. Jefferies analysts suggested that an offer of at least 270p would be more realistic given the potential synergies for acquirers in the UK insurance market.
Despite facing market volatility and underwriting pressures, Direct Line remains a sought-after target in the insurance industry. The company is focused on navigating challenges and rebuilding value independently.
Aviva has until December 25 to make a revised offer or withdraw its interest as per UK takeover regulations. Berenberg believes that a higher offer from Aviva would be well received by the market.
Following these developments, shares of the company surged by 41% at 4:34 ET (9:34 GMT).