The direct line insurance company has received a better deal from its larger UK rival Avivaat a business valuation of £3.6bn.
Aviva, the UK’s largest insurer, has secured a preliminary agreement to take over Direct Line after ordering third-party cash and shares to value London-listed Direct Line at 275p a share.
Aviva had her own The first offer dropped to 250p last weekand earlier this week it was part of 261 p.
The Direct Line board, led by chair Danuta Gray, rejected Aviva’s first approach of the new month, saying it was “extremely opportunistic” and “substantially” undervalued the business.
In a joint statement on Friday, the board of Direct Line said it is “confident” in its chances to stand the company and “continues to have the conviction and ability of the new leadership to deliver the new plan announced”.
However, the board added that the price offered meant that the company wanted to recommend shareholders that they would accept a formal offer, and that the combined company would provide “an opportunity to deliver significant synergies creating substantial additional value for both parties’ shareholders.”
Taking over Aviva, the dominant group would create more than a fifth of the motor insurance market and 15% of the domestic sector.
Under City takeover rules, Aviva had until 5pm on Christmas Day to provide a firm table for Direct Line.
The deal is likely to come under scrutiny from competition and insurance watchdogs at the Bank of England.
The Kent-based direct line said earlier this month He planned to kill DL jobs as part of the turnaround plan They were aiming to save £50m next year. This past year, it lost nearly 400,000 car insurance customers. Adam Winslow joined as chief executive in March from Aviva, where he ran the general insurance business in the UK and Ireland.
Post Newsletter promotion
In February and March, Direct Line two takeover approaches by Belgian insurer Ageasthe other valuing it at £3.2bn, or 239p a share, saying it was “uncertain and unattractive” for shareholders.
The UK insurer was spun off from the Royal Bank of Scotland in 2012 and listed on the London Stock Exchange two years later.
Aviva has sold businesses in France, Italy, Asia and elsewhere to focus on the UK, Ireland and Canada under its chief executive, Amanda Blanc. In March, he announced that he was returning to the Lloyd’s insurance market through the 242m purchase of Probitas and completed the deal in July.