As Aviva shares fall the deal is worth less.
Everything was going so well, we all get nervous when the management start playing at Gordon Gekko. |
I was hoping to see DLG closer to 300 at some point in next few years, having bought higher - but difficult to know how much improvement to expect from them organically. A certain 20% loss from a t/o or an uncertain gain in uncertain timescale. Easy for those who bought at 200p or lower. |
IndeedDlg active policies continue to decline |
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Lol
I would have bought DLG too, had i known about the previous bid earlier this year.
Totally passed me by. |
As I hold both this means an unfortunate period of noisy debate between Gollum and Smeagol in my head ;-) |
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What level of synergies can Aviva squeeze out of DLG ?
Personally I would like Aviva to walk away.
A 60% premium is extremely generous already. |
Peel Hunt analyst Andreas van Embden described Aviva’s offer as reasonable, but could be sweetened to up to 265p a share.
The offer is reasonable, in our view, discounts Direct Line Group (DLG’s) full recovery potential, and includes a bid premium in our view.
The rejection of Aviva’s proposal reflects the board’s confidence in DLG’s standalone outlook but we still believe engaging with Aviva makes sense.
Aviva could be persuaded to sweeten the deal to 260p-265p, which may help satisfy the DLG board. There is downside risk to DLG’s standalone strategy and retaining some upside in an Aviva-DLG combination could be an attractive proposition, which is worth exploring in our view.
Direct Line shares have rocketed on the news, rising by 39% to above 220p.
Van Embden added:
He said despite Direct Line’s healthy capital position, the recovery could be “bumpier than anticipated earlier this summer”.
Engaging with Aviva to fully explore their offer in more detail would make sense in our view. |
I really hope AV don't chase their initial bid but I've a really bad feeling about this - This could have ABDN and Interactive Investor written all over it.spud |
I thought about switching to DLG a month or so back but decided not to. Aviva have until Christmas day to make a firm offer or walk away. |
The price of success in the DLG bid, could be no Share Buyback next year.
Thus limiting the dividend increase to 5% (rather than circa 7% with a further share buyback)
I am sure a modest increase in the bid terms to secure DLG Board approval will win the day. |
Share dilution is not great news, but I suppose Amanda wants a new challenge to grow the business. However, I agree they should not overpay as DLG has been in turmoil for last few years. In the past, I was near to investing, but I backed off as I didnt think they would sustain their dividend, proved to be right .. I have a lot of trust in our CEO ...GLA |
DLG have at least 20% up side from here. My guess is Av will up their offer |
Yeah even as a DLG holder I don't want them to overpay as I hold AV. too.
Market seems to think they are not based on the opening fall here not being too bad in my opinion.
Good luck all 👍🏻 |
I can understand the logic here as they buy it on the cusp of a turnaround and add their own scale and savings to it. Just don't overpay |
Let's hope if it goes through Aviva doesn't end up paying too much...usual response from target that it indervalues the company... how much will Aviva pay before walking away...these deals don't always end well for the buyer.
I was hoping that Aviva would be the target for someone else! |
 Direct Line rejects GBP3.3 billion bid approach from Aviva
November 27, 2024 at 07:30 pm
Share
(Alliance News) - Aviva PLC on Wednesday said it had made an approach to buy Direct Line Insurance Group PLC, which had been rejected.
London-based Aviva said the cash and shares proposal was made last Tuesday. Direct Line shareholders would be entitled to receive 112.5 pence per share in cash, and 0.282 new Aviva shares per Direct Line share.
Based on Aviva's share price on the day before the proposal was submitted, the plan valued Direct Line at 250p per share or around GBP3.26 billion.
Aviva said it was a "highly attractive" and compelling" offer with "high execution certainty", which also met Aviva's strict financial criteria for acquisitions.
But Aviva said Direct Line on Tuesday had rejected the proposal as substantially undervaluing Direct Line, and has declined to engage further with Aviva.
In a statement, Direct Line, the Bromley, England-based motor and home financial services group, said it had concluded that the plan was "highly opportunistic and substantially undervalued the company."
"The board has considerable conviction in the capabilities of our newly established leadership team and stands firmly behind their delivery of our strategy. Under this strategy, the company continues to make early progress towards our financial targets, and expects to deliver attractive growth in profitability, capital generation and shareholder returns," Direct Line stated.
In March, Ageas AG withdrew a proposed bid for Direct Line after failing to secure the backing of its UK peer.
The Belgian insurer had made two proposals to buy Direct Line, but its advances were rejected. The two approaches valued each share in Direct Line at 233p and 239p per share respectively.
Direct Line rejected both, describing them as "uncertain" and "unattractive", significantly undervaluing its future prospects.
Direct Line has undertaken a strategic revamp under the stewardship of Chief Executive Adam Winslow, who the firm poached from potential suitor Aviva.
Aviva believes the acquisition would be consistent with its strategy to accelerate growth in its UK businesses and further pivot the group towards capital-light business lines.
The acquisition would expand Aviva's presence in the attractive UK Personal Lines market. In addition, the acquisition would allow Direct Line customers to benefit from Aviva's breadth, scale and financial strength.
Further, a deal would deliver "material cost and capital synergies, incremental to Direct Line's existing cost savings programme, Aviva stated.
Aviva said it remains committed to delivering growing dividends and sustainable capital returns to its shareholders.
Aviva closed 1.6% higher at 489.50 pence on Wednesday. Direct Line closed 0.2% lower at 158.70p.
By Jeremy Cutler, Alliance News reporter |
Yes the AV. price rising yesterday and DLG not does show how this was kept all in house and didn't leak out for once.
Agree AV. will fall a bit and DLG should jump at the open. From a personal level my DLG cost to buy amount is 30% lower than AV. due to DLG being what I class as a pain trade in recent years. Another chance again to rescue that in 2024 has to be a good thing and if it means more AV shares and a return of capital I will be very happy to be out of the woods.
Good luck all 👍🏻 |
It’s opportunistic and good decision by Aviva . Unfortunately I can see Aviva dropping at open |
Might buy some DLG shares if they are still where they are ;) |
Hopefully AV have enough savvy not to chase their initial Bid, like a 17 year old at their first hot hatch auction. spud |
They did a good job of hiding those discussions from the market!
Fantastic deal IMHO for DLG shareholders
Amazed DLG rejected it, but at the same time am relieved due to being only an AV. shareholder as would likely see a drop tomorrow |
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