Direct Line Insurance Group PLC (LSE:DLG) has signed a preliminary agreement to be acquired by Aviva PLC (LSE:AV.) for 275p per share.
The proposed combination includes 129.7p in cash and the rest in new Aviva shares, plus a 5p dividend payment subject to board approval.
Aviva’s offer represents a 73.3% premium to Direct Line’s closing share price on November 27, when Aviva first approached the group with a takeover proposal.
Direct Line rejected the initial offer, with the motor and home insurer calling it a "highly opportunistic” bid that “substantially undervalued the company".
But the sweetened deal, announced on Friday morning, has satisfied Direct Line’s wishes.
If completed, the acquisition will result in Direct Line shareholders holding approximately 12.5% of Aviva’s issued share capital.
The proposal is the latest blue-chip M&A transaction amid a groundswell of UK deals.
Last night, Vodafone Group PLC (LSE:VOD) was given the go-ahead to merge with Three to create an enlarged network provider, while FTSE 100-listed cardboard merchant DS Smith PLC (LSE:SMDS) is on track to be acquired by US rival International Paper.