AVIVA has increased its offer for Direct Line Insurance Group to about £3.4 billion (S$5.8 billion), days after its initial proposal to buy the UK motor insurer was rejected, people with knowledge of the matter said.
London-listed Aviva has made a fresh bid of about 261 pence per share as it seeks to convince Direct Line’s board to engage, the people said, asking not to be identified because the information is private. The new proposal is about 4 per cent higher than Aviva’s initial cash and stock proposal of 250 pence per share last week, which was rejected by Direct Line.
It’s unclear whether Aviva’s latest proposal will be enough to bring Direct Line to the negotiating table. Direct Line said last week that Aviva’s proposal was “highly opportunistic” and that its new leadership team would be able to deliver attractive growth.
Earlier this week, Berenberg increased its target price for Direct Line to 270 pence per share and said management sees a clear path to executing their strategic plan. Berenberg analysts wrote that Aviva has “ample capacity” to raise its bid, and said their base-case scenario is for an increased offer of 275 pence. JPMorgan Chase analysts have also written that Aviva might need to increase its bid to more than 275 pence in order to win approval from Direct Line’s board.
Deliberations are ongoing and there’s no certainty they will lead to a deal, the people said. A spokesperson for Aviva couldn’t immediately comment, while a representative for Direct Line declined to comment. BLOOMBERG
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