Insurer Direct Line, a major employer in Glasgow, has turned down a £3.3 billion takeover bid from Aviva, a fellow company in the insurance sector. Aviva had approached Direct Line with an acquisition offer, but Direct Line swiftly rejected it, calling it “highly opportunistic” and stating that it undervalued the business significantly.
Aviva confirmed that it had submitted a proposal to acquire 100% of Direct Line, offering Direct Line shareholders 112.5 pence per share in cash and 0.282 new Aviva shares per Direct Line share. This represented a premium of 55.9% to the average Direct Line share price over the past month.
In response, Direct Line’s board, along with their advisors, carefully considered the proposal and concluded that it did not accurately reflect the company’s standalone value. They expressed confidence in their current leadership team and their strategic direction, emphasizing the progress they have made towards their financial targets and expected growth in profitability, capital generation, and shareholder returns.
Direct Line’s board unanimously rejected Aviva’s proposal on the basis that it was opportunistic and undervalued the company. They believe in the potential of their business to deliver value independently and were not swayed by Aviva’s offer.
This news comes amidst a changing landscape for both Glasgow and Aberdeen airports, as well as ongoing Brexit consequences that are being faced. It remains to be seen how this rejection will impact both Direct Line and Aviva in the future, as they continue to operate within the competitive UK personal lines market.
