UK watchdog launches investigation into Aviva's £3.7bn takeover of Direct Line
The competition watchdog has launched an investigation into Aviva's multibillion-pound takeover of the rival insurer Direct Line.
The £3.7bn deal, which was agreed last year, will combine the insurance operations of both companies, in a move that is expected to create one of the biggest car insurers in the country.
The Competition and Markets Authority started its phase 1 investigation into the takeover on Wednesday, a procedural step that gives it up to 40 working days to evaluate the deal's possible impact on competition in the sector.
The deadline is set for 10 July, at which point the regulator will either give the merger the green light or proceed to a more in-depth phase 2 investigation.
Aviva, the UK's biggest insurer, agreed to buy the rival Direct Line for £3.7bn last year. Aviva's chief executive, Amanda Blanc, has expanded its business in the UK, Ireland and Canada, while selling off subsidiaries abroad.
Both companies are among the biggest insurers in the UK. Direct Line, which owns brands such as Churchill and Green Flag, also offers home, travel, pet and life insurance. Aviva sells a range of insurance, wealth and retirement products and has more than 20 million customers.
Adam Winslow, who became the chief executive of Direct Line just over a year ago, joined from Aviva where he was head of its UK and Ireland general insurance division.
Aviva and Direct Line told investors last year they planned to cut 5-7% of the combined group's employee base over three years, equivalent to between 1,600 and 2,300 jobs out of about 33,100. The companies said at the time that the ultimate number of affected roles could be lower because of unfilled vacancies and annual turnover of staff.
Prior to the deal, Direct Line had also been undergoing its own turnaround efforts. In November the company said it would axe about 550 jobs in an effort to cut costs. The insurer said 'core brands' such as Churchill would be maintained in the merged group.
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The takeover is the latest big blockbuster deal for Aviva, which bought the rival Friends for Life for £5.6bn in 2014.
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