Direct Line has rejected an offer worth more than £3billion from a Belgian rival as it became the latest London-listed company to be targeted by foreign predators.
The insurance giant, which owns brands including Churchill, Green Flag and Privilege, said that it has snubbed a 233p per share offer from Ageas.
Direct Line said that the proposal, which was worth £3.1billion, was ‘unattractive’ and ‘uncertain’, and undervalued the company.
It came just hours after Ageas confirmed it had tabled an offer for the FSTE 250 company and believed a tie-up would be beneficial for shareholders.
Yesterday, shares in Direct Line jumped by 23.8 per cent, or 38.85p, to close at 202.2p.
Target: Direct Line, which owns brands including Churchill, Green Flag and Privilege, said that it has snubbed a 233p per share offer from Aegas
A successful swoop by Ageas would add Direct Line to the growing list of UK insurers to be snapped up by foreign buyers in recent years.
In 2020, a consortium that was headed by the Toronto-based Intact acquired the British insurer RSA.
One year later Finnish insurer Sampo bought home and motor insurer Hastings. And beyond the world of insurance, there are other foreign buyers looking to swoop on companies in Britain.
Electrical retailer Currys is currently at the centre of a foreign bidding war between the US hedge fund Elliott Advisors and the Chinese online retail giant JD.com.
Wincanton, the UK’s last listed road haulage group, is also in the middle of a battle between French and American suitors.
Direct Line is one of the UK’s best-known insurance brands and was founded by entrepreneur Peter Wood in 1985.
It shot to notoriety in the 1980s thanks to its TV adverts featuring its small red telephone on wheels. It was owned by NatWest for a while and was spun out onto the stock market in 2012.
Yet the business has fallen on tough times following the pandemic and has struggled in the face of high inflation, ultimately driving up the costs of claims.
This backdrop prompted its former boss Penny James to step down in January last year shortly after the insurer warned on profits and scrapped its dividend.
Ex-Aviva boss Adam Winslow will take on the role as the firm’s new chief executive tomorrow.
The board said yesterday Winslow would refresh the group’s strategy and it was confident of the company’s prospects as a stand-alone entity.
Analysts at Panmure Gordon said: ‘Ageas will need to revise its offer with a higher price or larger cash component, or both, to convince the Direct Line board and shareholders.’
Ageas has 44,000 staff in 13 countries. Its UK business is the sixth-largest in car and home insurance.
***
Read more at DailyMail.co.uk