LONDON – Direct Line (LON:) Insurance Group PLC (LSE:DLG) has rejected an unsolicited acquisition proposal from Aviva PLC (LSE:LON:), deeming the offer to be highly opportunistic and undervaluing the company. The proposal, made on November 19, 2024, suggested an acquisition of Direct Line’s entire issued and to be issued share capital, with a combination of cash and Aviva shares.
The terms of the proposal outlined an offer of 112.5 pence in cash and 0.282 new Aviva shares for each Direct Line Group share, implying a value of 250 pence per Direct Line Group share based on Aviva’s closing share price as of November 18, 2024.
After careful consideration with its advisers, Direct Line’s Board unanimously decided on Monday to reject the proposal. The Board believes that the offer substantially undervalues Direct Line Group and does not reflect the standalone value the company can deliver. The Board expressed confidence in the company’s new leadership team and its strategic plan, which is anticipated to achieve growth in profitability, capital generation, and shareholder returns.
According to the rules set by the City Code on Takeovers and Mergers, Aviva now has until 5:00 p.m. on December 25, 2024, to either announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to declare that it does not intend to make an offer, which would be subject to Rule 2.8 of the Code. This deadline may be extended with the consent of the Panel on Takeovers and Mergers.
The announcement of the potential offer has initiated an ‘offer period’ for Direct Line Group in accordance with the Code. Shareholders are advised to be aware of the disclosure requirements under Rule 8 of the Code, which governs the conduct of parties during an offer period.
Jane Poole, Chief Financial Officer of Direct Line Group, is responsible for arranging the release of this announcement. The information in this article is based on a press release statement from Direct Line Insurance Group PLC.
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