Aviva set to complete £3.7bn takeover of Direct Line next month
Aviva expects its £3.7billion takeover of rival Direct Line is set to complete next month after 'constructive' talks with the competition watchdog.
The Competition and Markets Authority is not due to report back on its phase one investigation on the takeover until 10 July, but Aviva said on Tuesday it was 'confident' of receiving the all-clear for the deal.
Aviva said on Tuesday: 'Following constructive engagement with the CMA, Aviva remains confident of securing unconditional clearance by the phase 1 statutory deadline.'
Aviva is pressing ahead with plans for a court hearing to sanction a 1 July completion of the takeover, which was first announced on 23 December 2024.
The takeover has also caused concerns among workers at the two businesses after Aviva revealed at the end of last year that around 2,300 jobs would be at risk amid cost-cutting efforts in the wake of the deal.
The combined group will be a sizeable force in the motor insurance sector, estimated to cover more than a fifth of the total British market.
Direct Line owns the Churchill and Green Flag brands, as well as its namesake brand as part of a portfolio offering car, pet, home and other insurance policies.
But the scale of the combined group and its share of the market caught the attention of the CMA.
The regulator announced in May that it would examine whether the deal would result in a 'substantial lessening of competition' in the sector, though the probe was expected given the size of the two firms.
The takeover will see Aviva pay 129.7p in cash and 0.2867 of its own shares for each Direct Line share.
It will also pay up to 5p in dividend payments per share to Direct Line shareholders.
Aviva shareholders will own approximately 87.5 per cent of the new company while Direct Line shareholders will own about 12.5 per cent.
Before the Aviva deal was agreed, Direct Line had fended off a takeover attempt by Belgian company Ageas earlier last year.
Chief executive Adam Winslow joined Direct Line in March with the goal of turning the group around, having been appointed following the ousting of Penny James from the top job.
Direct Line has since announced £100million of cost cuts and axed 550 jobs.
Aviva shares slipped 0.13 per cent or 0.80p to 605.20p on Tuesday, having risen over 28 per cent in the last year. Direct Line shares were up 1.14 per cent or 3.4p to 302.40p, having risen over 50 per cent in the last year.
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