Aviva PLC's (LSE:AV.) planned £3.7 billion takeover of Direct Line Insurance Group PLC (LSE:DLG) is facing a investigation from the UK competition watchdog.
The Competition and Markets Authority said it is launching a phase-one probe in the deal, where the UK’s largest insurer agreed to buy major motor and house insurance rival Direct Line in December.
Under the phase-one investigation, the CMA has up to 40 working days to look into the deal’s possible impact on competition in the sector and decide whether to wave it through or proceed to a more in-depth phase 2 probe.
Both companies are among the UK's biggest insurers, with Aviva's 19.2 million customer base diversified across insurance, wealth and retirement in the UK, Ireland and Canada. Direct Line has almost nine million personal-lines customers in the UK.
After rejecting Aviva’s first advance, Direct Line agreed to a sweetened deal in early December, paving the way for the takeover to complete by mid-2025, the companies said at the time.