DLG chair’s plea as shareholders to vote on Aviva’s acquisition of insurer

Direct Line Group (DLG) chair Danuta Gray has urged shareholders to vote in favour of Aviva’s £3.7bn acquisition of the insurer next month.

The two firms announced that they had agreed on the terms of a cash and share offer in December 2024.

It is intended that the acquisition will be implemented by way of a court-sanctioned scheme of arrangement under part 26 of the Companies Act.

A scheme can be used to action the reorganisation of a company or group structure and requires approval by at least 75% to be effective.

On 10 March 2025, shareholders will vote on the scheme and a special resolution that will be proposed at a general meeting on the same day.

The scheme is expected to become effective in mid-2025 should shareholders vote in favour of it.

In a letter to holders of DLG shares, Gray said: “I am writing to you on behalf of the Direct Line directors to explain the background to and detailed terms of the acquisition, to encourage you to vote at the meetings to be held on 10 March 2025 to consider the acquisition and to set out the reasons why the Direct Line directors consider the terms of the acquisition to be fair and reasonable.

“The Direct Line directors are unanimously recommending that you vote in favour of the scheme at the court meeting and in favour of the special resolution to be proposed at the general meeting.”

She added: “If the scheme becomes effective, it will result in the allotment and issue of approximately 381,214,535 new Aviva shares to scheme shareholders, which would result in scheme shareholders holding approximately 12.5% and Aviva shareholders holding approximately 87.5% of the combined group immediately following the effective date, based on the issued share capital of each of Direct Line and Aviva, respectively, as at the latest practicable date.”

Operating loss

The deal comes after DLG recorded an operating loss from its ongoing operations of £189.5m in the 12 months to 31 December 2023.

DLG reached a preliminary agreement with Aviva on the financial terms for a potential acquisition on 6 December 2024, before terms were officially agreed later in the month.

Speaking at the time, Gray said: ”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.”