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Aviva's $4.6 Billion Bid for Direct Line Set to Create UK's Largest Insurer
Aviva is poised to acquire Direct Line in a $4.60 billion deal, forming the UK's largest home and motor insurer.
Aviva, the British insurance giant, is on the verge of acquiring its smaller rival, Direct Line, in a deal valued at £3.61 billion ($4.60 billion). This acquisition is set to create the largest home and motor insurer in the UK, surpassing competitors like Legal & General and closely trailing Prudential in market value. The proposed transaction, which includes both cash and stock, values Direct Line at 275 pence per share, a significant increase from the previously rejected 250 pence offer. Direct Line shareholders are set to receive 129.7 pence in cash and 0.2867 new Aviva shares per Direct Line share, giving them approximately 12.5% ownership of the combined entity.
The deal, which has been described as Aviva CEO Amanda Blanc's most significant acquisition, aligns with her strategy to focus on core markets in Britain, Canada, and Ireland. This move follows Aviva's recent divestments of overseas assets to streamline operations and boost profitability. Direct Line's portfolio complements Aviva's ambitions to expand in less capital-intensive sectors such as motor and home insurance.
The acquisition has been met with positive sentiment from analysts, who view the offer as fair and strategically sound. Jefferies analyst Philip Kett noted that the deal avoids the need for a hostile bid, while Berenberg analyst Michael Huttner highlighted the potential for increased market concentration and more rational pricing in the UK insurance sector.
Direct Line's shares have surged following the announcement, reflecting investor optimism about the merger's potential synergies and value creation. The deal is expected to close by December 25, pending a formal offer from Aviva. This acquisition marks a significant consolidation in the UK insurance market, promising to reshape the competitive landscape and deliver substantial benefits to both companies' shareholders.
Articles published about this story
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- theedgemalaysia.comtheedgemalaysia.com
- rte.ierte.ie
- marketscreener.commarketscreener.com
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