Direct Line rejects Belgian rival’s new offer

DIRECT LINE has rejected an increased bid of £3bn from a rival Belgian insurance company, describing it as “highly opportunistic”.

The FTSE 250 insurance company confirmed that Ageas tabled another cash-and-shares offer after its initial bid was rejected earlier this year.

The latest offer is worth 237p per share, valuing Direct Line at about £3.11bn. However, Direct Line said that its board unanimously rejected the latest offer because it continued to undervalue the business.

In an update, the company said: “The board considered the latest proposal with its advisers and continues to believe the latest proposal is uncertain, unattractive, and that it significantly undervalues Direct Line Group and its future prospects while also being highly opportunistic in nature.”

Direct Line said that its board is “confident” in the group’s standalone prospects. It advised shareholders to take no action. Ageas’s second proposal offered shareholders 120p in cash plus one new Ageas share for every 28.4 Direct Line shares they own.

It marks a 3pc increase on Ageas’s initial 231p-a-share offer made at the end of January worth around £3.1m.

Ageas has until March 27 to make a formal bid for Direct Line or walk away.

Direct Line is the latest target of a foreign buyer seeking to reap the benefits of low UK stock market prices.

The insurance group has since hired Robey Warshaw, a boutique investment bank where George Osborne, the former chancellor, is a partner to help with defending the takeover attempt.

Ageas has argued that buying Direct Line would create a strong business in the UK specialising on household and motor insurance.

The international insurance group, which focuses on Europe and Asia, previously said that it saw “strong potential” in the personal lines sector, which offers risk coverage to people rather than businesses.

Hans De Cuyper, the chief executive of Ageas, said: “We look forward to engaging with the Direct Line board of directors on the terms of our improved possible offer.”

Direct Line, founded in 1985, has grown to become one of the UK’S leading insurance brands. The group now owns Churchill.

The latest announcement comes ahead of Direct Line’s preliminary 2023 results, which will be published next week. The company said it will also provide an update on its turnaround plan.