Aviva’s £3.7 billion acquisition of competitor Direct Line is on track to be finalised next month, following what the insurer has described as “constructive” discussions with the Competition and Markets Authority (CMA).
While the CMA is scheduled to release its initial findings from the phase one investigation on July 10, Aviva has expressed confidence in securing approval for the deal.
“Following constructive engagement with the CMA, Aviva remains confident of securing unconditional clearance by the phase 1 statutory deadline,” it said.
Aviva is pressing ahead with plans for a court hearing to sanction a July 1 completion of the takeover, which was first announced on December 23 last year.
The combined group will be a significant force in the motor insurance sector, estimated to cover more than a fifth of the total UK market.
Direct Line owns the Churchill and Green Flag brands, as well as its namesake brand as part of a portfolio offering car, pet, home and other insurance policies.
But the scale of the combined group and its share of the market caught the attention of the CMA.
The regulator announced in May that it would look at whether the deal would result in a “substantial lessening of competition” in the sector, though the probe was expected given the size of the two players.
The takeover has also caused concerns among workers at the two firms after Aviva revealed at the end of last year that around 2,300 jobs would be at risk amid cost-cutting efforts in the wake of the deal.
The takeover will see Aviva pay 129.7 pence in cash and 0.2867 of its own shares for each Direct Line share.
It will also pay up to 5p in dividend payments per share to Direct Line shareholders.
Aviva shareholders will own approximately 87.5% of the new company while Direct Line shareholders will own about 12.5%.
Before the Aviva deal was agreed, Direct Line had fended off a takeover attempt by Belgian company Ageas earlier in 2024.
Chief executive Adam Winslow joined Direct Line in March with the goal of turning it around, having been appointed following the ousting of Penny James from the top job.
Direct Line has since announced £100 million of cost cuts and axed 550 jobs.
