Direct Line shares jump 38% after rejecting Aviva’s £3.3bn offer to create insurance giant – business live
UK car insurer, which owns Churchill and Green Flag brands, said approach was ‘highly opportunistic and substantially undervalued the company’
In other takeover news, the Australian investment bank Macquarie has just agreed to buy the UK-listed waste management company Renewi for £700.9m.
It is paying 870p a share in cash.
We are always cautious about the bidder’s curse, but we believe Aviva’s approach to Direct Line is strategically coherent, could offer considerable synergies, and is currently highly financially attractive.
The main risk for Aviva is that it seems to be stretching an already below-average solvency ratio, so any further generosity would need to come from shares. We can see an offer rising from the current 250p to around 300p.
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