Direct Line rejects £3.3 billion bid approach from Aviva

Aviva announced that it had made an offer to acquire Direct Line Insurance Group, but the proposal was rejected.

Direct Line rejects £3.3 billion bid approach from Aviva

The London-based insurer said it made a cash and share offer last Tuesday, where Direct Line shareholders would receive 112.5 pence in cash and 0.282 new Aviva shares for each Direct Line share. Based on Aviva's share price prior to the offer, the proposal valued Direct Line at 250p per share, or approximately £3.26 billion. Aviva described the offer as "highly attractive" and "compelling," with "high execution certainty" and meeting its strict financial criteria for acquisitions. However, Direct Line rejected the proposal on Tuesday, stating it significantly undervalued the company and declined to engage further with Aviva. In its response, Direct Line, a Bromley-based provider of motor and home financial services, called the offer "highly opportunistic" and said it substantially undervalued the company. "The board is confident in the capabilities of our new leadership team and strongly supports their delivery of our strategy. The company is making early progress toward its financial goals and expects to achieve attractive growth in profitability, capital generation, and shareholder returns," Direct Line said. Earlier this year, Ageas AG also withdrew a proposed bid for Direct Line after failing to gain support from its UK counterpart. Ageas had made two offers, valuing each Direct Line share at 233p and 239p, both of which were rejected as "uncertain" and "unattractive." Direct Line has undergone a strategic overhaul under CEO Adam Winslow, who was recruited from Aviva. Aviva believes the acquisition aligns with its strategy to accelerate growth in the UK market and shift further toward capital-light business lines. The deal would also strengthen Aviva's position in the UK Personal Lines market, offering Direct Line customers access to Aviva's scale, financial strength, and breadth. Additionally, Aviva expects the acquisition to generate significant cost and capital synergies beyond Direct Line's existing cost-saving initiatives. Aviva emphasized its commitment to delivering growing dividends and sustainable capital returns to shareholders.