Direct Line agrees £3.7bn Aviva takeover deal

Direct Line's board has given the green light to Aviva's £3.7bn acquisition proposal, signalling the end of its tenure as an independent entity. In a statement released to the stock exchange this morning, Direct Line's board recommended Aviva's latest £3.7bn bid for the company.

According to the terms of the agreement, shareholders will receive 0.2867 Aviva shares, in addition to 129.7p in cash and a potential dividend of up to 5p per share. The offer places a 73 per cent premium on Direct Line's closing price on 27 November, the day before the offers started coming in, or 49.7 per cent above its six-month average share price, as reported by City AM.

Post-deal completion, Direct Line's shareholders are set to hold approximately 12.5 per cent of Aviva.

While Direct Line initially turned down Aviva's preliminary overtures, it indicated earlier this month that it would likely support a firm offer exceeding £3.6bn. "This deal is excellent news for the customers and shareholders of Aviva and Direct Line," Direct Line’s CEO Amance Blanc remarked today.

"It builds on our track record of delivering four years of strong financial performance and, in line with our strategy, it accelerates our growth in capital light business."

The announcement follows Direct Line's rejection of two previous takeover attempts by Belgian insurance titan Ageas this year, with the most recent bid valuing the company at £3.1bn. Should the shareholders give their nod of approval in the March vote, Aviva's acquisition is expected to be finalised by mid-2025.