The two firms have reached an agreement on the terms of a cash and share offer
Aviva has reached an agreement to buy Direct Line Group (DLG) for £3.7bn.
In a joint statement released this morning (23 December 2024), the two firms announced that they had agreed on the terms of a cash and share offer.
Under the terms of the deal, for each DLG share held, shareholders will receive 0.2867 new Aviva shares and 129.7 pence in cash.
“This values each DLG share at 275 pence and values the entire diluted share capital of DLG at approximately £3.7bn,” the statement confirmed.
Amanda Blanc, chief executive at Aviva, said the deal “builds on our track record of delivering four years of strong financial performance” and “accelerates our growth in capital light business”.
She added: “Aviva and DLG share a deep commitment to excellence in looking after customers and this will remain a top priority following the acquisition.
“The financial strength and scale of the combined group means customers will benefit from competitive pricing, an enhanced claims experience and even better service.
“The acquisition of DLG by Aviva will bring together a number of the UK’s leading brands in a more efficient business, which is very well positioned to generate strong returns for all shareholders.”
Why the deal?
The deal comes after DLG recorded an operating loss from its ongoing operations of £189.5m in the 12 months to 31 December 2023.
Read: Why is Aviva so keen on taking over DLG?
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This was a major downswing from 2022, when the firm recorded a loss of £6.4m.
As part of efforts to turn this around, DLG has been aiming to remove at least £100m of costs by the end of 2025 on a run-rate annualised basis as part of its standalone strategy.
However, DLG reached a preliminary agreement with Aviva on the financial terms for a potential acquisition on 6 December 2024.
The DLG board said that it ”remains confident” in the insurer’s prospects as a standalone company and ”continues to have conviction in the capabilities of the newly established leadership team”.
However, it added that it had “carefully considered the proposal” from Aviva and that it was minded to recommend to shareholders that they accept a formal offer.
Following the deal being officially agreed today, Danuta Gray, chair at DLG, said that the takeover offers ”significant value for DLG shareholders”.
Gray added: ”The board of DLG has been very pleased with the progress made by its new management team, but DLG is in the early stages of an extensive turnaround and it believes the offer allows DLG shareholders to realise the value of their investment in the near-term.
”DLG’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.”
His career began in 2019, when he joined a local north London newspaper after graduating from the University of Sheffield with a first-class honours degree in journalism.
He took up the position of deputy news editor at Insurance Times in March 2023, before being promoted to his current role in May 2024.View full Profile
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