Aviva’s £3.7 billion acquisition of rival insurer Direct Line is on track to complete in early July, with the company expressing confidence in receiving regulatory clearance. Despite an ongoing probe by the Competition and Markets Authority (CMA), the insurance giant is preparing for a court hearing to sanction the deal next month.
Aviva expects its £3.7 billion takeover of Direct Line to complete as early as 1 July, following what it called “constructive engagement” with the Competition and Markets Authority. Although the CMA’s phase one investigation is not set to conclude until 10 July, Aviva said Tuesday it remains “confident of securing unconditional clearance by the phase 1 statutory deadline.”
In preparation, the company is pressing ahead with a court hearing to finalise the acquisition on 1 July. The deal, first announced on 23 December 2024, will see Aviva pay 129.7p in cash and 0.2867 of an Aviva share for each Direct Line share. An additional dividend of up to 5p per share will also be paid to Direct Line shareholders.
Once complete, the merged entity is expected to command a significant presence in the UK motor insurance sector, covering more than 20% of the market. Direct Line’s well-known brands, including Churchill and Green Flag, will join Aviva’s existing portfolio, further solidifying its dominance across car, home, pet, and other insurance lines.
However, the size of the deal has drawn scrutiny from regulators. In May, the CMA announced a formal review to determine whether the acquisition would lead to a “substantial lessening of competition”, a move largely anticipated given the scale of both firms.
Concerns have also been raised about the human cost of the merger. Aviva previously disclosed that approximately 2,300 jobs could be cut as part of its post-deal cost-saving measures. Direct Line, for its part, had already announced £100 million in cost reductions and 550 job cuts under the leadership of new CEO Adam Winslow, who took the helm in March.
Before agreeing to the Aviva offer, Direct Line had rejected a bid from Belgian insurer Ageas earlier in 2024. Aviva’s proposal gives its shareholders roughly 87.5% of the combined group, with Direct Line shareholders owning the remaining 12.5%.
On Tuesday, Aviva shares slipped slightly by 0.13% to 605.20p, while Direct Line shares rose 1.14% to 302.40p. Both stocks have performed strongly over the past year, with Aviva up over 28% and Direct Line gaining more than 50%.
The market now awaits the CMA’s official ruling, though Aviva appears confident that its landmark deal will cross the finish line next month.
Source www.thisismoney.co.uk
