Shares in Direct Line Insurance Group PLC jumped on Wednesday after Belgian insurer Ageas SA confirmed it was considering making an offer for the company.

Shares in Direct Line, the Bromley, England-based motor and home insurer, soared 22% to 199.69 pence each in London on Wednesday.

Industry peer Admiral Group PLC rose 2.2% to 2,633.00p. Shares in Ageas, meanwhile, eased 2.2% to €38.47 in Brussels on Wednesday.

Ageas said the terms of the proposed cash and shares offer had an implied value of 233p per Direct Line share, representing a premium of 43% to 163.35 pence, closing price on Tuesday.

The terms of the proposed bid are 100p in cash for each Direct Line share, and one new Ageas share for every 25.24047 Direct Line shares.

Ageas said this would value Direct Line at around £3.10 billion.

A combination offered ‘compelling strategic and financial value for both Ageas and Direct Line shareholders’, it added.

Ageas highlighted the potential to drive operational improvements and efficiencies, in part through the removal of overlapping overhead costs after the integration of Ageas’ and Direct Line’s UK businesses.

Earlier Wednesday, Bloomberg reported that Direct Line had rebuffed an approach from Ageas, citing people familiar with the matter.

https://www.bloomberg.com/news/articles/2024-02-28/uk-insurer-direct-line-said-to-reject-ageas-takeover-approach

Direct Line, which has a market value of around £2.57 billion, was created through an initial public offering from Royal Bank Of Scotland‘s insurance division in 2012.

Former Aviva PLC UK boss Adam Winslow will officially join the company as chief executive officer on March 1.

He will be replacing CEO Penny James, who agreed to step down immediately in January last year after the company skipped its final dividend due to a big increase in weather related claims causing a loss on underwriting.

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