Aviva Shares Surged 9.45% Amid Foreign Firm Takeover Rumours

The Aviva plc (LON: AV) share price surged 9.45% after a report by the UK Times magazine indicated that a foreign firm could acquire the insurance company. The report did not give much details but was attributed to “market chatter that refused to die down”.

The Times report indicated that a potential foreign company could be looking to acquire Aviva, given its impressive performance under CEO Amanda Blanc. The insurance company recently announced the acquisition of AIG’s UK life insurance business for £460 million ($563 million). 

Investors cheered the news despite the scanty details available about the potential acquisition since it is very likely that any potential buyer would have to pay a significant premium to acquire Aviva, given its impressive performance over the last few years under Amanda Blanc. 

However, we now have to wait for the interested buyer to submit a bid for Aviva to determine whether the premium attributed by the company’s shareholders to its stock price is justified. However, a lower bid than Aviva’s trading price today would likely be rejected by investors. 

Hence, the bidder will likely have to present a bid much higher than today’s highest trading price. Potential bidders might also be scared away from making an offer for the insurance company after today’s massive rally. 

Aviva recently announced its largest acquisition of AIG’s UK life insurance business. The UK insurer will acquire the business from Corebridge Financial, Inc., a New York-listed company majority-owned by AIG.

Blanc, who has been Aviva’s CEO for the past three years, has prioritised increasing the company’s investor returns by selling business units across the globe to refocus the company on its core markets and business lines. 

The strategy has worked out exceptionally well, as evidenced by Aviva’s latest earnings results, which are now always better than expected. The acquisition of AIG’s subsidiary comes after the company disposed of its stake in Singapore Life, which generated enough funds for the latest transaction. 

Aviva said the acquisition will add 1.4 million group protection members and 1.3 million individual protection customers, with the deal expected to close in the first half of 2024 upon regulatory approvals.

Aviva share price. 

The Aviva share price surged 9.45% to trade at 425.00p, from Thursday’s closing price of 388.30p.