 Interesting view in the Telegraph suggesting that Aviva's 12% share of the home insurance market and DLG's 10% would create the dominant force in the home insurance market and whilst in the car insurance market, Aviva's 8% combined with DLG's 12% would also be significant, Admiral would still retain the no.1 spot but the significant share in both markets would raise the concern it could be anti-competitive and would attract the attention of the Competition and Markets Authority (CMA)but that the very recent political change with the CMA also now supporting growth could have been a key part in the timing of the bid.
The following is the introduction to the article.
"Drivers beware: Aviva wants to eat the competition in car insurance
The multibillion-pound swoop for Direct Line threatens to make owning a car in Britain even more unaffordable
Ben Marlow
Aviva boss Amanda Blanc must have been rubbing her hands with glee when the boss of Britain’s embattled competition watchdog stood up to speak at the prestigious Chatham House think tank last month.
Competition and Markets Authority (CMA) chief Sarah Cardell came out with a fresh pledge to support “productive and sustainable growth”. After years of griping from the City and Westminster about alleged over-anxiety concerning harm to consumers, her words were taken as the herald of a more permissive era for takeovers.
Perhaps it was a coincidence, but within days corporate Britain was being assailed by a barrage of fresh bids – now joined by a £3.3bn offer from Aviva for smaller rival Direct Line.
Cardell is astute enough to know that changing the mood music in this way was a big move. But it’s unlikely she was expecting the shift to be tested so quickly and in such a big way." |
It is NOT in the mutual interests of Institutions to willingly try to encourage Aviva to make a higher formal offer and the latter know that. I really believe that Aviva will walk away if another bidder enters at closer to 280p or 300p. If you take a look at the Legal and General presentation this morning one can see tremendous growth potential in the key markets sectors they both operate.
I did post on LGEN post 7088 this morning about the attractions available from UK/European talent in the AI sector. This post was connected to an article in this last weekends FT front page of Life and Arts written by Ian Hogarth and illustration by Sebastian Thibault. It is well worth the time to read in full. His view is that "despite the early lead in the race to develop AI we have the ability to build a technology to rival Alphabet, Amazon or Apple. Rather than the share buy backs I would reason that investment in AI makes better sense. Again one needs to read the article and see how the UK have sold out far too soon to US enterprises and taken our talent with them. Today I see that a large software house Atlassion Corp(TEAM, the US code), recently invested in two AI initiatives and their share price has jumped well over 5% and that will increase rapidly in my opinion on the news. |
The average forecast of thirteen analysts for DGL's share price over the last 3 months is 221p and that's based on forecasts of 11p this year rising to 26p in 2027. And that's assuming they reach or beat those forecasts, which is something of a tossup I'd say..
I'll continue to hold AV. but any bid over 270/275p and I'll be out. |
Yup. AV should stick to their original bid or pull out. Once the price collapses, the DLG herd will come back whining & grateful. spud |
Aviva needs to be careful they don’t overpay. Personally I thought 250 was a fair price considering DLG was languishing in the 150’s. Anything above another 20p on the offer will likely negate the benefits of the acquisition imo
In the meantime AV. Share price will hold around this level or lower until either another bid materialises or AV. walks away. Personally, not a massive fan of share dilution to make an acquisition but I trust Aviva & Amanda Blanc to make the right decision in respect of both sets of shareholders.
Question is how greedy will DLG be? If a 2nd offer of say 265-270 does materialise, will it be enough? I think if DLG rejected again, it would be in the best interest of Aviva and its shareholders to walk away.
Sooner this is sorted out, the better! |
DLG shareholders would soon be moaning if AV don't increase there bid, and the share price collapses...
I think Av should play hardball and offer £2.60 take it or leave it offer... |
I read the article , it’s holders of DLG shares talking up their holding and backing their CEO.
As expected .
I suspect they will encourage DLG board to engage with Av behind closed doors .
Decision by 25th |
LG i don't think i really need to tell you what's in the article as it's all in the headline! |
I'm a cheapskate cfro. The article is behind the paywall. Could you give us the gist of the article, please? |
Looks like the major shareholders of DLG have decided they will all hold out for a higher bid...
Top Direct Line Shareholders hold out for a higher Aviva bid |
You may be rewarded with your own money paid back to you, when it goes XD.
Has anyone worked out the "real" return on AV. shares over the last 5 years? |
The cure for that restlessness?
Think long term, think divis, and forget about the very short term price movements that occur with all shares. These pale into insignificance over time.
You may well then be rewarded but there are never any guarantees. |
While I don't lose sleep owning Av I do get restless . |
...It is depressing to not see a decent rise in share price
Bidder's shares normally fall. |
Unless you're looking to sell, surely a low price enables a VFM accumulation point in an extremely well run company that enables restful sleep at night.Unless I'm missing something.spud |
Bid for Av may be a little wishful thinking .
I've been wishful for a long time.
While our Dame has not put a foot wrong and move on DLG may be right . It is depressing to not see a decent rise in share price |
I think that AV will prevail in the DLG bid, with a slightly sweeter Offer to gain the recommendation of the DLG BOD
Although the initial share price reaction may well be positive. Personally I am not enamoured by the prospect. 20% of the UK Motor insurance market an exceedingly 'fine margin' bisininess, it is very high profile politicaly which will generate mega noise in the media. The rational relies on AV being able to upsell other products to the DLG customer base.
Also the cost to us, could well be a reduction in dividend growth in 2025 from 7% to 5%, as I suspect there may well not be a Share Buyback in 2025 to fund the deal.
Personally I would have rather seen AV flog off their Motor business and buy M&G with the proceeds
I have to wonder if the attraction of DLG to AV is as a defence against a takeover of itself. With 20% of the market, any bid from a company with ANY Motor Insurance exposure would almost certainly be bounced by HMG
If there is a bidder for AV out there, they need to act now |
If Av share price rises from here they will not need to increase bid offer to DLG by much if at all.
Could be win win for both parties |
"Insurers have seen a surge of inquiries from people buying life insurance to provide a lump sum that will cover the cost of an inheritance tax bill. If you get the right amount of cover it could mean that your beneficiaries will not have to sell any assets, such as the family home, to settle the bill when you die. Life cover could also solve the cashflow problems that many families face following a death, especially given delays in the probate system." Times Money |
From the article…
“Deutsche Bank analysts reckoned Aviva could raise its offer to 270p. “Our sense from talking to a wide range of investors is that shareholders of both Aviva and Direct Line are receptive to this deal,” they said.”
“ We’re making excellent progress in the early stages of a significant turnaround…221;. Marking his own homework.
I’m hopeful we’ll see a higher, supported offer.
cyberian. Agree with all your comments. |
From the Sunday Times article I think that the Direct Line CEO has put his foot in it with respect to the comment over his £6 Million bonus after 3 years. Why would the common shareholders who have over 55% in Aviva and DLG want to indulge him and his new team over at least 3/4 years. They will reap a more certain return accepting Aviva's offer in my opinion. Personally think a slight increase to 270p would be more than acceptable and see no point in overpaying.Again Ageas and others entering the bid for DLG would not gain any rationalization over cost savings. |
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. |
Register to chat with like-minded investors on our interactive forums.
Hot Features
Premium
