Aviva Agrees £3.7bn Deal to Buy Direct Line (AV, DLG)

Aviva (LON: AV.) announced Monday that it has agreed a £3.7 billion cash-and-share deal to acquire Direct Line Insurance Group (LON: DLG). 

The acquisition aims to create a leading UK personal lines insurer. Aviva shares are down around 0.1% on Monday, while Direct Line is up over 3%.

The deal values Direct Line at 275p per share, a 73.3% premium on its 27 November closing price. Direct Line shareholders will receive 0.2867 new Aviva shares, 129.7p in cash, and up to 5p in dividends per share. 

Once the acquisition is closed, Aviva shareholders will own 87.5% of the combined company. Direct Line shareholders will hold the remaining 12.5%.

Aviva’s CEO, Dame Amanda Blanc, said the acquisition is “excellent news for the customers and shareholders of Aviva and Direct Line.”

“The financial strength and scale of the Combined Group means customers will benefit from competitive pricing, an enhanced claims experience and even better service,” she said.

“The acquisition of Direct Line by Aviva will bring together a number of the UK's leading brands in a more efficient business, which is very well positioned to generate strong returns for all shareholders.”

Direct Line has been implementing a turnaround strategy under CEO Adam Winslow. 

Despite recent progress, the company says the Aviva deal allows Direct Line shareholders to realise the value of their investment in the near term..

“The offer represents a substantial premium and reflects the attractiveness of Direct Line, a high-quality business with powerful insurance brands, excellent customer focus, and exceptional people,” said Danuta Gray, Chair of Direct Line.

The acquisition is expected to be completed in mid-2025.