Competition watchdog to probe Aviva's £3.7bn takeover of insurance rival Direct Line
Britain's competition regulator has launched a probe into Aviva's £3.7bn takeover of insurance rival Direct Line.
The combined company would control more than a fifth of the UK home and insurance markets, according to analysts.
The Competition and Markets Authority (CMA) will now investigate whether the deal will mean 'a substantial lessening of competition'.
After a preliminary probe it must decide by July 10 whether to proceed with a full-scale competition probe that could take months.
Insiders remain confident that the deal will complete by the middle of the year.
The CMA is unlikely to intervene further given that the market share of the enlarged group will be less than 25 per cent of the market, they argue. Aviva declined to comment.
The deal, if concluded, would represent Aviva boss Amanda Blanc's most ambitious corporate transaction to date.
Blanc is seen as having turned around the FTSE 100 group's fortunes, bulking up in key markets such as Britain, Ireland and Canada while selling assets in other countries.
Direct Line chief executive Adam Winslow previously had a senior role under Blanc at Aviva. He took over in March last year and fended off a takeover approach from Belgium's Ageas and cut hundreds of jobs to help it recover from previous woes.
Direct Line suffered a turbulent period when its profits were battered by a rise in the cost of claims – and previous boss Penny James quit in 2023.
The company, which also owns the Churchill and Green Flag brands, offers car and home insurance as well as pet and home policies.
Last November it rejected a £3.3billion approach from Aviva before succumbing when Blanc made an improved offer over the Christmas period.
The deal could spell 2,300 job cuts, the companies warned. Winslow may also face an uncertain future should the deal complete.
Direct Line shareholders voted in March to approve the takeover.
The CMA announcement comes as Aviva prepares to issue a first-quarter trading update today. Shares in Aviva fell 0.4 per cent, or 2.2p, to 572p. Direct Line slipped 0.6 per cent, or 1.6p, to 287.4p.
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