Aviva Agrees to Buy Direct Line for £3.7bn

By Evans Momodu
2 minute read

Aviva has announced a £3.7 billion agreement to acquire rival insurance company Direct Line ahead of a Christmas Day deadline. This comes after a £3.3 billion bid was rejected in November.

The acquisition will create a significant player in the UK motor insurance market, covering over 20% of the sector.

Aviva CEO Amanda Blanc described the deal as "excellent news," emphasizing the shared commitment of both companies to exceptional customer care. "The financial strength and scale of the combined group mean customers will benefit from competitive pricing, an enhanced claims experience, and even better service," she said.

The transaction terms include 129.7 pence in cash and 0.2867 Aviva shares per Direct Line share, with up to 5 pence in dividend payments per share for Direct Line shareholders.

Following the merger, Aviva shareholders will hold 87.5% of the combined company, while Direct Line shareholders will own the remainder.

The deal is expected to be finalised by mid-2025, subject to a shareholder vote scheduled for March.

The announcement follows a recent controversy involving billionaire Elon Musk, who criticised Ms. Blanc’s reported diversity-focused hiring practices. Aviva’s share price experienced a slight dip in the wake of Musk’s comments, though it had been declining beforehand.

The merger signals a strategic move to consolidate market power in a competitive industry while addressing operational and financial challenges faced by both companies.
Source: Sky news