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Direct Line has rejected a bid worth more than £3bn from a Belgian rival, becoming the latest London-listed company to be targeted by foreign predators.
The insurance giant, which owns brands such as Churchill, Green Flag and Privilege, said it had rejected an offer of 233 pence per share from Ageas.
Direct Line said the proposal, valued at £3.1bn, was “unattractive” and “uncertain” and undervalued the company.
It came just hours after Ageas confirmed it had submitted a bid for the FSTE 250 company and believed a partnership would be beneficial for shareholders.
Yesterday, Direct Line shares rose 23.8 per cent, or 38.85p, to close at 202.2p.
Target: Direct Line, owner of brands including Churchill, Green Flag and Privilege, said it has rejected a 233 pence per share offer from Aegas.
A successful deal by Ageas would add Direct Line to the growing list of UK insurers to be snapped up by overseas buyers in recent years.
In 2020, a consortium led by Toronto-based Intact acquired British insurer RSA.
A year later, Finnish insurer Sampo bought home and car insurer Hastings. And beyond the world of insurance, there are other foreign buyers looking to attack companies in Britain.
Electrical goods retailer Currys is currently at the center of a foreign bidding war between US hedge fund Elliott Advisors and Chinese online retail giant JD.com.
Wincanton, the UK’s last listed road haulage group, is also in the middle of a battle between French and American suitors.
Direct Line is one of the UK’s best-known insurance brands and was founded by businessman Peter Wood in 1985.
He rose to fame in the 1980s thanks to his television advertisements featuring his small red telephone on wheels. It was owned by NatWest for a time and went on the stock market in 2012.
However, the business has fallen on difficult times following the pandemic and has struggled in the face of high inflation, which has ultimately driven up claims costs.
This context led its former boss Penny James to resign in January last year, shortly after the insurer warned about profits and eliminated its dividend.
Former Aviva boss Adam Winslow will take over as the company’s new chief executive tomorrow.
The board said yesterday that Winslow would update the group’s strategy and was confident about the company’s prospects as an independent entity.
Analysts at Panmure Gordon said: “Ageas will need to revise its offer with a higher price or a larger cash component, or both, to convince Direct Line’s board and shareholders.”
Ageas has 44,000 employees in 13 countries. Its UK business is the sixth largest in home and motor insurance.