Aviva to Acquire Direct Line in a £3.7 Billion Deal

Aviva has formalized the terms of its acquisition offer for Direct Line, valuing the non-life insurance company at approximately £3.7 billion ($4.65 billion). The insurer and asset manager Aviva won over its smaller rival with a cash and share offer worth 275 pence per share at the beginning of December. This represents a 10% increase from a previously rejected approach and a 73% premium over Direct Line's closing price on November 27. According to Aviva's announcement, the boards of directors of both groups have agreed on the terms of the recommended offer. Shareholders of Direct Line will receive 0.2867 new Aviva shares plus 129.7 pence in cash—financed from their own cash resources—and will be entitled to a dividend of up to 5 pence.