Direct Line, a leading insurance firm, has declined a higher takeover bid from its rival company Ageas based in Belgium. This caused a six percent drop in Direct Line shares as the firm rejected the increased cash-and-shares proposition made on March 9, which valued Direct Line at around £3.11 billion.
The offer marks a rise of three percent from the initial approach, valuing the company at approximately £3.1 billion.
Direct Line commented: “The board considered the latest proposal with its advisers and continues to believe the latest proposal is uncertain, unattractive, and that it significantly undervalues Direct Line Group and its future prospects while also being highly opportunistic in nature.”
It added, “Accordingly, the board unanimously rejected the latest proposal.”
Ageas has until 5pm on March 27 to make a firm offer or choose not to pursue under City Takeover Panel rules. Expressing confidence in the firm’s outlook, Direct Line stated it was confident in its “standalone prospects”.
“Direct Line Group will release its 2023 preliminary results on Thursday 21 March 2024 and will also then provide an update on further initiatives to build on the operational improvements implemented during 2023,” it disclosed. Ageas, focused on Europe and Asia, maintains that acquiring Direct Line would create a powerful business entity in the UK, primarily focusing on household and motor insurance.
When they first made their offer last month, they said they see “strong potential” in personal insurance, which is for people not companies. They also noted that the number of insurance claims has levelled out over the past year.
