Direct Line may gain time to recover

The “once-juicy prospect” of a takeover of Direct Line is in doubt, says Emma Taggart in the Times. Direct Line’s board rejected a second takeover bid from Belgian rival Ageas last week, and the chances of getting a higher offer have also fallen after reports that a topten shareholder in Ageas was “trying to stop the takeover”.

This “latest twist” comes at a time when Direct Line has been left as a “sitting duck” thanks to “a number of profit warnings” that have caused a slide in the share price in the past two years.

It’s good news that Ageas’s takeover of Direct Line is in trouble, says Alex Brummer in the Daily Mail.

The boards of UK companies need to show more “dogged determination in batting away opportunistic takeovers, especially from firms with muddled ownership”.

One of the major shareholders in Ageas is the “opaque” Chinese holding company Fosun, while the Belgian government also holds some shares in the company.

While it’s true that Direct Line has been “undermined by regulatory breaches and failure to move speedily enough into the digital world”, UK investors need to show some “patience and fortitude”.

The arrival of Adam Winslow from Aviva as the new CEO raises hopes that a modernisation of its system and rationalisation of its brand could help to turn around the “wounded enterprise”.

Internal disagreements within Ageas could buy Direct Line’s Winslow time, says Lex in the Financial Times. The sale of Direct Line’s brokered insurance business has already “bolstered its balance sheet”.

Shareholders should be “wary” that much of Ageas’s offer is in equity, given its lacklustre performance thanks to its “overexposure to unfashionable guaranteed life contracts”. However, Direct Line also needs to offer a credible plan for “competitive and profitable growth”.