Aviva reaches deal with Direct Line
Aviva has formalized the terms of its acquisition of Direct Line Group, which values the insurer at around 3.7 billion pounds ($4.65 billion).
In the press release announcing the deal terms, the companies said they planned to cut 5-7% of the combined group’s employee base, equivalent to 1,600-2,300 jobs. Aviva employed 23,000 people at its last annual report, while Direct Line Group employed 10,100. The cuts will take place over three years.
“This deal is excellent news for the customers and shareholders of Aviva and Direct Line. It builds on our track record of delivering four years of strong financial performance and, in line with our strategy, it accelerates our growth in capital light business. Aviva and Direct Line share a deep commitment to excellence in looking after customers, and this will remain a top priority following the Acquisition. The financial strength and scale of the Combined Group means customers will benefit from competitive pricing, an enhanced claims experience and even better service. The acquisition of Direct Line by Aviva will bring together a number of the UK’s leading brands in a more efficient business, which is very well positioned to generate strong returns for all shareholders.” – Commenting on the Acquisition, Dame Amanda Blanc, Group Chief Executive Officer of Aviva.
“The Board of Direct Line is pleased to recommend Aviva’s offer for the company, which delivers significant value for Direct Line Shareholders. The offer represents a substantial premium and reflects the attractiveness of Direct Line, a high quality business with powerful insurance brands, excellent customer focus, and exceptional people. The Board of Direct Line has been very pleased with the progress made by its new management team, but Direct Line is in the early stages of an extensive turnaround, and it believes the offer allows Direct Line Shareholders to realise the value of their investment in the near term. Direct Line’s customers and employees will be joining an established, successful business with a wide array of insurance products that is well-placed to deliver for all its stakeholders.” – Danuta Gray, Chair of Direct Line.
“Direct Line is an excellent business, home to many well-loved insurance brands, and this year we have made fast progress on our turnaround strategy. Bringing Direct Line and Aviva together offers the opportunity to create a strengthened and enlarged business, with both organisations sharing a deep passion for serving customers and for supporting their people. In a highly competitive UK general insurance marketplace, the combined entity will be very well placed to deliver for its customers. I am proud of what Direct Line has achieved to date, and this offer will enable the business to continue to succeed as part of a combined group with Aviva.” – Adam Winslow, Chief Executive Officer of Direct Line.
