Aviva pushes to seal Direct Line deal before Christmas

Aviva and Direct Line have been locked in acquisition talks over the weekend ahead of the Christmas Day bid deadline.

FTSE 100 insurer Aviva has until 5pm on December 25 to make a firm offer, agree an extension or walk away after attacking its smaller rival last month.

Direct Line’s board has told shareholders it would back an enhanced £3.6bn takeover offer after rejecting a previous £3.3bn approach.

This was the third offer for the troubled insurer in less than 12 months, after Direct Line, which also owns Churchill and Green Flag, rejected a takeover attempt by Belgian rival Ageas this year.

And it dealt a fresh blow to the London stock market, which has seen a mass exodus of companies in 2024. Insurers are expected to update the market tomorrow.

Following the proposed deal, Direct Line shareholders would own around 12.5 per cent of the enlarged group, which would be the UK’s second largest motor insurer behind Admiral.

Direct Line chief executive Adam Winslow joined the struggling company from Aviva in March with the aim of turning around the company’s fortunes.

He replaced Penny James, who was removed following a profit warning. Winslow has cut costs by £100m by focusing on core businesses and cutting 550 jobs. On Friday he announced a deal with Compare the Market, the comparison site run by his father Peter Winslow.

It had also previously established a plan to pay out approximately 60 percent of operating profits as regular dividends. Aviva boss Dame Amanda Blanc’s attempt to take over Direct Line puts her at odds with her former colleague. The two are said to have “bad blood” after Winslow left Aviva for Direct Line.

If the acquisition goes through, he is expected to leave. A City source previously told the Mail on Sunday there was “no way he would stay”.

Since taking over as Aviva boss in 2020, Blanc has revived the insurer’s fortunes with a series of deals. Potential areas of expansion, including its protection and health branch.