Direct Line accepts improved takeover Offer from rival Aviva

The insurance company Direct Line has accepted an improved offer from its rival Aviva in a deal valuing the business at £3.6bn.

- Mark Sweney Julia Kollewe

Aviva, the UK's largest insurer, has succeeded in reaching a preliminary agreement to take over Direct Line after submitting a third cash and shares bid valuing the London-listed Direct Line at 275p a share.

Aviva had its first offer, at 250p, rejected last week and this week raised it to 261p a share.

Direct Line's board, led by the chair, Danuta Gray, rejected Aviva's first approach last month, saying it was "highly opportunistic" and "substantially" undervalued the business.

In a joint statement yesterday, the board of Direct Line said it remained confident in its prospects as a standalone company and continued "to have the conviction and capabilities of the newly established leadership team to deliver the announced strategy".

However, the board added that the offer price meant it was minded to recommend shareholders accept a formal offer and that the combined company would provide the "opportunity to deliver significant synergies creating substantial additional value for both sets of shareholders".