28 February 2024, 16:34
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PA
The automotive insurance coverage large mentioned it thought the supply was ‘unsure, unattractive, and that’s considerably undervalued’ the enterprise.
Direct Line has rejected an “opportunistic” takeover method value about £3.1 billion from Belgium-based rival Ageas, because it turns into the most recent UK-listed firm to be eyed by a possible purchaser.
The automotive insurance coverage large mentioned it thought the supply was “unsure, unattractive, and that’s considerably undervalued” the enterprise.
Nonetheless, its shares soared by 1 / 4 on Wednesday amid the takeover hypothesis.
Ageas revealed it was within the early levels of constructing a doable supply which might worth Direct Line’s whole share capital at practically £3.1 billion, paid for with current money and new money owed.
The worldwide insurance coverage group, which is concentrated on Europe and Asia, mentioned shopping for Direct Line would create a powerful enterprise within the UK with a concentrate on family and motor insurance coverage.
It added that it noticed “sturdy potential” within the private strains sector, referring to any insurance coverage coverage taken out by people somewhat than companies, and that the variety of insurance coverage claims have stabilised previously yr.
The market has additionally benefited from new pricing guidelines introduced in final yr which forestall renewing prospects from being charged greater than new prospects, the agency mentioned.
It comes after a turbulent interval for Direct Line which was hit by larger motor cowl claims final yr, due to colder climate and rising prices.
It swung to a loss over the primary half of 2023, with former boss Penny James stepping down final yr within the wake of a revenue warning and transfer to scrap its shareholder dividend.
However Direct Line mentioned its administrators unanimously rejected the proposal from Ageas on the finish of final month.
“The board thought-about the proposal with its advisers and regarded it to be unsure, unattractive, and that it considerably undervalued Direct Line Group and its future prospects whereas additionally being extremely opportunistic in nature,” it instructed shareholders.
Adam Winslow is ready to take over because the chief government from March.
On Tuesday, London-listed electricals large Currys mentioned it had rejected a second takeover method from the US proprietor of Waterstones, Elliott Advisors.
