Aviva buys Direct Line for £3.7 billion.
Aviva has reached an agreement to acquire its competitor Direct Line for £3.7 billion, ahead of a deadline set for Christmas Day. The insurance company announced this arrangement with the smaller rival shortly after a £3.3 billion offer was rejected in November.
The merger of these two firms is expected to create a significant presence in the motor insurance sector, potentially covering over 20% of the UK market. Amanda Blanc, the chief executive of Aviva, expressed her enthusiasm for the agreement, describing it as "excellent news." "Both Aviva and Direct Line are deeply committed to providing exceptional customer service, and this will continue to be our primary focus following the acquisition," she stated.
"The financial robustness and scale of the newly formed entity will enable us to offer customers competitive pricing, an improved claims process, and superior service." This announcement came shortly after billionaire Elon Musk criticized Ms. Blanc's reported strategy of approving senior appointments of white men to enhance diversity. In the following days, the company's share price experienced a slight decline, although it had already been on a downward trend prior to Mr. Musk's comments. As part of the acquisition, Aviva will offer 129.7 pence in cash along with 0.2867 of its own shares for each share of Direct Line. Additionally, Aviva will provide up to 5 pence in dividend payments per share to Direct Line shareholders, resulting in Aviva shareholders owning 87.5% of the new entity, while Direct Line shareholders will hold the remaining portion.
The merger is anticipated to be finalized by mid-next year, pending a shareholder vote on the agreement scheduled for March.
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