The article :- |
Sunday Times "Direct line boss hits out at Aviva bid"
Echo's previous view of opportunistic.
Sir Peter Wood said raising offer 10% would be "fair result"
Pandora "raising offer to 270p would be acceptable to both Aviva and DLG holders.
My view is market is receptive to this takeover even at c270p and we may see Av share price climbing after deal there by benefiting current DLG and Av holders. |
 Direct Line founder Sir Peter Wood says Aviva must raise its offer
Updated 21:50, 30 Nov 2024
By ALEX BRUMMER CITY EDITOR
Amanda Blanc needs to raise her bid for insurer Direct Line by 'several hundred million pounds' if the Aviva boss is to secure control of its rival, founder Sir Peter Wood says.
Speaking to The Mail on Sunday from his Palm Beach mansion in Florida, near to Donald Trump's Mar-a-Lago, he also expressed frustration at Direct Line losing its way.
'I made it the world's most efficient insurance company', he said, describing how he eliminated the middleman in the form of the insurance broker.
'It's sad it's been run so badly. After I left, the HR department multiplied ten times. It didn't develop a female brand, multi-car or multi-family policies, and just seemed to go backwards.' Wood says staying off comparison websites was a mistake, adding: 'They should have made Direct Line a premier product, where people answer the phone immediately and you got an individual giving you personal attention.'
He expressed sympathy for chief executive Adam Winslow's effort to turn it around, saying: 'He is trying to do a good job, but it's a three or four year job.'
On Thursday, Direct Line rejected Aviva's £3.3 billion bid, whereby shareholders would receive £1.12p a share in cash and 0.28 of a new Aviva share for every Direct Line share held. |
Me neither Pander. I'm paranoid that AV will be sucked into a bidding war & caution against DLG overpricing itself. It's only worth the sum of its parts (synergies aside). spud |
Not sure about this one. Getting sucked in is a tangible threat. Direct line is a "has been" 80s business model that has not moved well with the times. |
The Belgium company Ageas would not have the same synergy that Aviva has to provide adequate cost savings and investment benefit and as stated by others their share price would fall accordingly. Again Ageas paper would also not be as attractive compared to Aviva. |
Another 10% on the bid is worth about £350m.
Not a large amount spread over the years after synergies.
AV may be prepared to go a little higher.
Odd position for DLG holders.
Because some of the bid is in Aviva shares, accepting a lower bid would give AV. shares a boost.
Much to ponder for both parties. |
The Belgians share price has improved because they dropped their bid for dlg.
If they re-engage, their price will drop again, and possibly by more if they get into a bidding war with Av. |
Failed Belgian offer must have hissed of many DLG holders. Seeing share price drop from 230p ish to near 150p must have hurt.
I suspect they won't want to miss this opportunity and will back Av t/o.
If I was CEO of DLG I would encourage Belgians to comeback and show interest.
Belgian offer is currently better for DLG as their share price has gone up.
Pleased that our share price hasn't moved , can only presume market thinks there is value here even with t/o |
Agreed! Far too easy to be lured into a bidding war. I'd also say 300p is more than borderline and would largely defeat the object of buying the Company in the first place.spud |
One major shareholder talking up his own book. I think AV should just offer a take it or leave it deal at the current bid or just above - then DLG shareholders can watch their share price collapse back down if they reject it. |
What next in Aviva's bid for Direct Line?
Some snippets from the article:
A source close to Direct Line said "the ball is in Aviva's court".
One major shareholder in Direct line thinks 300p will be enought to get the deal over the line.
Other major shareholders still to make a decision.
KBW reckons the deal would become "borderline" for Aviva at around 300p per share and that a counter-bid should not be ruled out.
Jefferies would not be surprised to see Aviva make an additional bid and thinks 270p might be acceptable.
CMA only likely to block the deal if more than 25% of the motor insurance market. The combined group should see Aviva claiming just over 20%. |
Or how about just keeping it simple and avoid the complex conspiracy theories? Perhaps AV has just spotted a major competitor with a decent market share having short term problems and sees an opportunity to buy them on the cheap. |
Thanks CJAC, your insights are always welcome.
Could it be that, if Av have c. 10 share of uk car insurance market and DLG have similar share, someone at Av. has said they either need to get bigger or get out ?
By getting bigger, perhaps they are hoping to improve pricing power by removing a key competitor?
or more simply, perhaps the AV BOD are doing it to spite their ex colleagues who jumped ship to DLG, and all Av. are doing is trying to entice another buyer to step forward ? :-) |
the thing that i dont understand is the lack of ambition. having trimmed down av its now surely time to get book value growth going. why not dispose of the heritage biz given its low roe. what are they doing about anaemic results at agi? why not spin off a bpo biz into a jv? what are they doing in private assets and why not launch a jv here. what about ceding a reins biz to capture some of the excessive premiums they spend here. no lets buy a boring motor insurer and target one of the most competitive low roe mkts that by the way will be targeted by the fca - figure me how if i buy insurance today its 1000 but if i forward start by 20 days its 800. not good business. i get synergies but the cma wont like it anyway. yawnsville. |
How do you post that Italian mafia hand across the throat symbol? |
I could hazard a good guess
Turkeys don t vote for Xmas
Not in the normal course of events. |
Didn't realise the CEO,CFO & COO all joined Direct Line from Aviva.Not sure what Amanda will do with them if the bid succeeds. |
My own view is this is where there should be a Stewards
Neither Aviva or Direct Line have covered themselves with glory.
'Openess' full disclosure to the wider market.
There is a taint and while I am happy to have got out of a hole there must be rumblings as to what exactly has happened here.
In short the whole thing stinks.
My view ! |
Direct Line bosses need to wake up. aviva are right to go straight to shareholders as the DLG board are morons. the stock price was sub 160p for a reason and management is one of them |
From Hargreaves Lansdown Direct Line is playing hard to get, again, as the board rejects a tentative takeover offer from Aviva. This isn't the first offer in 2024, having rejected multiple attempts from Belgian insurer Ageas earlier in the year. But there's a case to be made that Aviva is a better suiter, given it already shares markets with Direct Line in the UK.It's no secret that Direct Line has struggled over the past few years to deal with a challenging motor insurance market, and operational missteps have been a drag on performance. But there's a fresh management team focussing on core areas like Motor and Home insurance and recent results that have painted a better picture.Since Motor makes up nearly half of all active policies, unprofitable contracts written over the past 18 months have weighed on recent performance. But aggressive price hikes have finally caught up with inflated costs. Last we heard, new policies are being written at levels in line with a net insurance margin of above 10% - back in the land of profit.The Motor division isn't back to delivering positive margins just yet, but that should fix itself over the second half. Direct Line was slower to raise prices than the wider market which means it'll take longer to feel the benefits than peers.But, policyholders tend to be fickle and are happy to switch around in search of a better deal. Motor customer numbers are still falling, though the pace is slowing. That's okay in the short term, while margins are the priority. Further out, we'll be hoping to see the introduction of Direct Line to price comparison sites as a catalyst for customer growth.Aside from Motor, performance across other business lines has been pretty good. Home insurance is a big part of the operation and remains profitable despite an uptick in claims inflation. Price hikes are again being called on, but customer numbers are proving a little more resilient than in Motor.Capital levels are back at comfortable levels, and the board's decided to keep an added buffer in place while the transformation efforts run their course. It's also taking a more prudent approach to dividends with a new policy based on paying out 60% of post-tax earnings. We think this is a good move given the market's cyclical nature.This version of Direct Line looks more attractive than it has been for some time. However, with so much change in senior positions and a turnaround effort that's far from complete, there are ongoing challenges. Plus, at least in the short term, the valuation is likely to be driven by takeover enthusiasm, which adds another layer of risk. |
That had crossed my mind - as you say - all speculation! :-) |
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