What price Aviva shares after the merger and dilution? |
 Aviva grabs a Christmas ‘bargain’
Aviva (AV) has picked up a ‘bargain’ after its £3.7bn bid for insurance peer Direct Line (DLG) was accepted. The Citywire Elite Companies AA-rated insurer has agreed to pay 129.7p per Direct Line share in cash plus 0.2867 of new Aviva shares and a dividend payment of up to 5p per share, totalling 275p per Direct Line share. Aviva shares gained 0.9% to 461p yesterday.
‘This deal strikes a balance that seems to deliver value for both parties,’ said Hargreaves Lansdown equity analyst Matt Britzman. ‘Direct Line has been navigating choppy waters, with its market share steadily eroding and a history of missteps from previous management leaving the ship off course.’ He said, for Aviva, the ‘price tag is sitting on the edge of what might be considered a bargain, but the strategic potential could prove to be a real cracker.’ ‘Acquiring Direct Line cements Aviva’s status as the heavyweight champion in the UK home and motor insurance markets,’ said Britzman. ‘Beyond bolstering their market dominance, the deal unlocks opportunities to put the Direct Line transformation on the fast track, while capitalising on efficiency gains that come with increased scale.’ |
I wonder why the BBC has not reported this story |
I can't help but think that although Motor Insurance is a capital light business.
It is short tail, low (or no) margin, highly competitive and Politically vulnerable.
So it would not have been my choice to give away 12.5% of the Company for.
But Dame Amanda has certainly earned the right to have the benefit of the doubt |
https://news.sky.com/story/aviva-agrees-to-buy-direct-line-for-3-7bn-13279269 |
Amanda Blanc is the making of Aviva |
And you couldn't have a better Chief Executive than Amanda Blanc to ensure that all will go well. |
Aviva (AV.L) said it plans to achieve annual pre-tax cost savings of at least £125m through job cuts, "economies of scale and increased efficiency".
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Christmas has come early for Direct Line investors, as Aviva's £3.7bn buyout has officially been signed, sealed, and delivered. The terms of the deal remain unchanged from what was floated to the markets earlier this month, and the festive confirmation has wrapped up what many investors had already baked into expectations, leaving little surprise under the tree.
"This deal strikes a balance that seems to deliver value for both parties. Direct Line has been navigating choppy waters, with its market share steadily eroding and a history of missteps from previous management leaving the ship off course. While the new management team has been working to steady the vessel, even they couldn't deny that Aviva's offer was the golden ticket they'd struggle to replicate on their own. Though they've expressed confidence in their independent strategy, this proposal was simply too compelling to pass up.
"For Aviva, the price tag is sitting on the edge of what might be considered a bargain, but the strategic potential could prove to be a real cracker. Acquiring Direct Line cements Aviva's status as the heavyweight champion in the UK home and motor insurance markets. Beyond bolstering their market dominance, the deal unlocks opportunities to put the Direct Line transformation on the fast track, while capitalizing on the efficiency gains that come with increased scale. It's a bold move that could turn out to be a gift that keeps on giving." |
See slide 24 of the investor presentation for dividend explanation. |
"I think the last few posts (pOpper,Glavey and fenner66) are a little off beam"
Oh that the subtleties of our language are lost on some... |
Its all a bit tricky working out the total dividend paid by the company vs the dividend per share. Think I’ll need that Steven Hawking book ;-)
Cash cost of the dividend
Dividend per share
…from the time of completion
Come on its not that hard to understand is it ? |
Well at least you Have to agree that by referring to two different measures of dividend in the same paragraph they have made it , (chosen to make it) ambiguous.
They could have kept the same measure +mid single digit % per share, but deliberately chose not to.
So WHY?
For me its only one option, rather than commit to something we can all measure quite readily they chose to make it opaque.
Now everyone may place their faith in management that as smart as they are , meant nothing by it, but my reading of that kind of decision is based on reading hundreds if not thousands of RNS's and if on the whole if it can be interpreted 2 ways , its because they can make people think one thing whilst doing another. |
FT .reports 2,000 jobs to go in Aviva takeover of DLG .
Expecting cost savings c £125m in the following 3 years |
Here's my take on the future divis:
This para in the announcement refers:
The Aviva Board currently expects to declare a mid-single digit percentage uplift in the dividend per Aviva Share following Completion. This uplift will apply to the enlarged share capital of Aviva post-Completion. The Aviva Board intends to maintain the current guidance of mid-single digit growth in the cash cost of the dividend from this rebased level.
I see this as meaning 2025 divi per share will be up say 5% on 24 because completion is due in 25.
2026 divi per share should rise a further say 5% on 25 as it will be cash cost of 25 plus that growth on the enlarged capital.
I don't see any cuts in divi per share in all this and agree with 1rob. |
I think the last few posts (pOpper,Glavey and fenner66) are a little off beam
The 2024 dividend is uneffected and obviously not available to DLG shareholders
They have said that the 2025 dividend per share will be mid single digit % higher than the 2024 dividend per share.
....The 2025 total cost of dividend is then the rebased level
Thus the 2026 dividend will be + mid single digit % higher in the total dividend cost |
p0pper - since there are going to be 12.5% more shares in issue a 5% or so rise in "cash cost " is effectively a dividend cut.
If that is correct - I think it is - then its all about how they spin the words to give an impression to the masses that is factually accurate but the opposite of what is interpreted.
Posts above "think" dividends are going to rise , whilst it looks like initially they will fall post acquisition , mission accomplished with the wording? |
Indeed, I believe you do read it sadly. |
"From this rebased level". Does that mean they will only spend the same amount as they are now even though there will be far more shares in circulation? and then still increase it by mid single digits, if so it means a divi cut?
Sadly that's how I read it. |
I am trying to decode the AV statement re their dividends and Share Buybacks going forward
They are saying today in the DLG document
...'Enhancing shareholder distributions: as part of its commitment to shareholder returns, Aviva currently intends to de: clare a mid-single digit percentage uplift in the dividend per share following Completion. Aviva further intends to maintain the current guidance of mid-single digit growth in the cash cost of the dividend from this rebased level.'
I take this to read
2024 Dividend: +7% ie mid single digit increase in the DIVIDEND CASH COST so 5% + benefit of Share Buybacks reducing number of shares in issue
2025 Dividend: +5% ie mid single digit increase in the DIVIDEND PER SHARE
2026 Dividend: +7% ie reverting to mid single digit increase in the DIVIDEND CASH COST so 5% + benefit of Share Buybacks reducing number of shares in issue
I think this part of the DLG Announcement clearly indicates NO Share Buy-back in 2025 |
It's going to take around 6 mths to complete, by then it will be good value! |
They overpaid. Short term pain, but eventual gain. |
I was bargaining on holding AV. in the end when I bought my DLG shares, AV. offering a far more stable business and a significantly higher dividend. |
275p looks a very fair price and i think this is excellent news for both sets of shareholders..
No reason why this shouldn't be earning enhancing to AV and will really strenghten-up AV's position in the motor insurance market. |
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