Direct Line has rejected a £3.3bn takeover offer from FTSE 100 insurer Aviva, the second suitor it has rejected so far this year.
In a stock exchange announcement, Aviva confirmed that it had submitted an offer last week, which valued the FTSE 250 firm at 250p per share.
The offer represented a premium of 60 per cent to Direct Line’s share price on the day before the proposal was submitted.
Direct Line said the deal was “highly opportunistic and substantially undervalued the company”.
“The Board has considerable conviction in the capabilities of our newly established leadership team and stands firmly behind their delivery of our strategy,” the insurer said in a statement.
“The Board considered the proposal to not reflect the standalone value that can be delivered by the Company,” it added.
Direct Line is undertaking a turnaround plan, which it hopes will deliver around £50m in cost savings in 2025. In its third quarter trading update, released earlier this month, the firm said it was considering cutting around 550 roles as part of its savings programme.
The firm has already rebuffed two approaches from the Belgian insurer Ageas this year, with the latter valuing the firm at £3.1bn. The board unanimously rejected Ageas’ approach back in March, also describing it as “highly opportunistic”.
However, Aviva said the deal would deliver unlock value that is “inaccessible to Direct Line standalone” and would deliver “material cost and capital synergies, incremental to Direct Line’s existing cost savings programme”.
Shares in Direct Line have fallen over 14 per cent in the year-to-date, giving it a market cap of around £2.1bn.
Under UK takeover rules Aviva has until Christmas Day to announce an intention to make an offer or walk away.