Aviva PLC (LSE:AV.) has confirmed it has reached an agreement to buy rival Direct Line Insurance Group PLC (LSE:DLG) in a £3.7 billion deal.
Direct Line shareholders will receive 0.2867 new Aviva shares, 129.7p in cash and up to 5p in dividends per share under the agreement, the FTSE 100-listed insurer said Monday.
Each Direct Line share will be valued at 275p as a result, marking a 73.3% premium to their closing price on November 27 when Aviva first launched its takeover bid.
Direct Line had rejected Aviva’s first advance, before agreeing to a sweetened deal in early December, paving the way for the takeover by mid-2025 based on shareholder approval.
“This deal is excellent news for the customers and shareholders of Aviva and Direct Line,” Aviva chief executive Amanda Blanc 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.”
Direct Line chair Danuta Gray added: “Direct Line is in the early stages of an extensive turnaround, and it believes the offer allows shareholders to realise the value of their investment in the near term.
“Direct Line's customers and employees will be joining an established, successful business with a wide array of insurance products that is well-placed to deliver for all its stakeholders.”