Certainly is and building.
Maybe close once shorts are out?
Unusually large discount to offer. |
Arbitrage trade. |
 EdmondJ; hostile bids are, almost by definition, without access to the targets books. However they usually come with the caveat that the bid is subject to due diligence except, occasionally, where a bidding war occurs. This is not in that category. To suggest someone will bid for a company without due diligence is akin to proposing to buy a house (in this case a house with substantial past problems similar to subsidence) without a survey.
StevenST; I agree. Winslow would have to be completely incompetent to not have closed the big holes and would be mad to let a competitor in to find a major problem. It is the unexpected which sometimes bites in these processes. Issues being identified which the board are blissfully unaware of. I do not expect it but it is a factor in a risk discount. As for internal and external auditors. The internal people are usually behind any problem so that is not a reassurance. The external auditors have been shown time and again in other companies to have done a weak job. And the analysts who pour over results have as much understanding of insurance as they have of medieval English (in fact many will have a better understanding of the latter after a classics degree). I do not expect problems but it cannot be entirely discounted at this stage, hence the price. |
The Aviva deal, a mix of cash, shares, and a small dividend, delivers a 73% premium to Direct Line’s pre-offer price, so nobody can really complain. |
The Aviva deal, a mix of cash, shares, and a small dividend, delivers a 73% premium to Direct Line’s pre-offer price, so nobody can really complain. |
This period is due diligence and should be ok as DLG CEO was in his job since Feb/Mar therefore if anything fishy - he would have blown the whistle quick and loud , plus there are internal and external auditors combed through the books when H1 result was reported . This is just a routine formality of the takeover process - imo . |
There have, historically, been many firm offers made - including hostile, above boards of directors that were subject to due diligence.
A possible hostile offer has never existed and by definition would be ridiculous. |
EdmondJ clearly does not understand the bid process. It would be a firm offer had DLG engaged with Aviva before now and opened the books (and other matters). Since they declined to engage any bid at this point is provisional as DLG will now make the information available to Aviva in a data room so that they can confirm that the basis on which they are making the bid is correct. This is nothing new. I have been in data rooms for possible bids and the process is pretty exhaustive which is why I expect it to take us close to the deadline before the bid is confirmed. It not only involves reviewing the financial reports but also involves a questioning process to get under the numbers. Additionally any material contracts, such as motability, will be reviewed. Most importantly I suspect, Aviva will want to interrogate operational management (not the board) on how things like claims reserves have been set and exactly what remediation action was taken (and the underlying assumptions) to close the black hole which led to Penny James leaving. And, of course, Aviva will be very interested to look at assets and valuations for things like Green Flag which are not part of their own core expertise. |
The actual cash portion of £1.347 represents about 48% ( or about half ) of the AV offer value . This is an extremely good deal - only 10 days ago - DLG share price was £1.52 . I have bought earlier 35000 shares at £2.522 and hope to make a killing as opportunity never come often
I sold earlier last week after the 1st offer at £2.282 and now even 24p more than I sold I think is an opportunity not to be missed . 😃 |
The sweetener is the 5p cash dividend to be given prior to the completion so in fact the actual cash is £1.347 p ( £1.297 + 5p) .
Although the shares portion part of AV can fluctuate and can either increase or decrease the final total depending on AV share price at the time of conversion which cannot be determined and controlled ( in my view , AV share price would come down after the offer is agreed and signed by both parties) . |
fenners666 Dec '24 - 11:09 - 1960 of 1962
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EdmundJ was that post mostly your words ?
Or did you lift that from Socialist Worker or some such ?
*
Did provide a link which shows it was Ben Marlow's article in The Torygraph, lol. |
£2.75 in a mixture of Cash, Aviva shares and a dividend seems a very fair price.
DLG shareholders should now accept the sweetened Offer.
We will be doing just that and others should follow our lead. |
£2.75 in a mixture of Cash, Aviva shares and a dividend seems a very fair price.
DLG shareholders should now accept the sweetened Offer.
We will be doing just that and others should follow our lead. |
There is a lot of talk about the discount to the offer price. We should not forget the 5p dividend which makes the effective current offer 280p. Discount is therefore approaching 10%. However there has not been an offer yet and if there isn't then we are trading at a premium of 57% to the expected future price |
EdmundJ was that post mostly your words ?
Or did you lift that from Socialist Worker or some such ?
You have majored on the combination being 20% of car insurance and have acknowledged that this is less than Admiral - but of course have not said how much of the market is Admiral - is it 25% already ? I thought I had heard that number. CMA is not investigating Admiral at that % so no reason to look at Aviva.
Admiral anecdotally is alleged to be the cheapest on the market atm. |
As the market share is less than 25% or about - this will not be referred and it will be ok except a tiny risk that Aviva might wake up on next morning and decide otherwise . My view it will move to £2.60 very very soon .all my chips are on the dLg to be taken over .IMO |
#Bountyhunter, 253 pence seems to be too cheap to me, perhaps 260 pence would be fairer as the risk premium is still there until a firm offer arrives, then there is the CMA if they want to run a rule over it but market share is less than 25% combined..
If there are opportunities to book stronger dividends at a discount over December then it does make sense to let them/some of these go, I keep sight of this and not wedded to the share, it has been a poor investment since coming into DLG in 2021 for the dividends and that has not gone so well.. :o)
See what the market bid offers up over the day/week/month..
OR just ride it out, take the next 5 pence FY dividend here and convert to AV stock at 7% income on completion.. |
Direct line has provided approx 250p in dividends since it floated in 2012. It's initial shareprice was 203p so it's final shareprice will be 30% higher after it's 12 year history.I suspect it may take Aviva a lot longer to get it's money back for this offer.Aviva investors must be feeling fairly sick. |
But I guess it would be fine if a massive foreign insurer took over because that would be “inward direct investment in the UK”. |
I agree LLB, I'll be holding as well at least with the price at this level. I assume that the firm offer still needs to be made before 25th which should reduce the risk premium and I can't see it being left that long. |
DLG Boarand major shareholders have accepted this proposed offer by Aviva - Aviva needs to confirm it and sign in the dotted line by 25 Dec. then everything is done . Therefore until the FAT LADY sings then the curtain is down and the show is ended., so there is still a very tiny risk that Aviva might ………;.. but very unlikely therefore every chip of mine is place on Red as the ball is on the red number on the rollette wheel however the wheel still slowing spinning and until the wheel stops then the payout is made. |
At 252 the risk discount to the offer price at 9% does look too big. I assume Aviva are now entering a data room and will take close to the remaining 2 weeks and a bit to confirm the bid, but some risk does remain (as well as time cost to completion) so a 5-6% risk/time discount is justified meaning it should be 260 or so, and I would take that. Some risk does remain, especially if DLG still have some weakness or uncertainty around their prior year reserves so I do not want to be greedy.
The only disappointment in all this is that we do not get another bite at the cherry as happened after Ageas. With no other focused retail general insurers other than Sabre on the market the game is pretty much over in this sub sector. Good luck to all and enjoy the profits. |
The proposed deal still has to get competition authority clearance, although presumably Av. has already sought some initial guidance?
(So long as the politicians don't get involved, it'll be fine!) |
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