Aviva AV. has increased its offer for Direct Line Insurance Group DLG to around £3.4 billion, Bloomberg reports.
Bloomberg sources that London-based Aviva has made a fresh bid of about 261p per share as it seeks to secure the backing of Direct Line’s board.
The new proposal is about 4% higher than Aviva’s initial cash and stock proposal of 250p per share last week, or £3.26 billion, which was rejected by Direct Line.
Under the plan Direct Line shareholders would be entitled to receive 112.5p per share in cash and 0.282 of a new Aviva share for each Direct Line share.
Shares in Direct Line initially rose more than 7% on the news before settling 0.5% higher at 238.00p in London. Aviva was 1.2% higher at 486.19p.
Last week Aviva said it was a “highly attractive” and “compelling” offer with “high execution certainty”.
But Direct Line dismissed it as “highly opportunistic” and said it “substantially undervalued the company.”
Direct Line has undertaken a strategic revamp under the stewardship of Chief Executive Adam Winslow, who the firm poached from potential suitor Aviva. Winslow had been CEO of UK & Ireland General Insurance for Aviva.
By Jeremy Cutler, Alliance News reporter
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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