The U.K. Competition and Markets Authority (CMA) has opened a merger inquiry into Aviva plc’s planned acquisition of Direct Line Insurance Group plc. The CMA is accepting public comments on the deal until May 29 and plans to issue a Phase 1 decision by July 10.
The agency is reviewing whether the acquisition would create a merger situation and if that could significantly reduce competition in any U.K. market for goods or services.
The CMA invited comments from interested parties to support its review.
Aviva agreed to acquire Direct Line for £3.7 bn, a price higher than its earlier offer of £3.51 bn.
The acquisition is expected to be completed by mid-2025, pending regulatory approval and other conditions.
Following the deal, Aviva shareholders would own about 87.5% of the combined group, while Direct Line shareholders would hold around 12.5%.
Direct Line provides a range of insurance products, including motor, home, commercial, travel, pet, and rescue coverage.
The original offer represented a 73.3% premium to Direct Line’s closing share price on Nov. 27, 2024, and a 49.7% premium to its six-month volume-weighted average price before that date.
Under the terms of the agreement, Direct Line shareholders will receive 129.7 pence in cash and 0.2867 new Aviva shares for each Direct Line share they own.
Additionally, there is a provision for a 5 pence per share dividend. Post-acquisition, Direct Line shareholders are expected to hold approximately 12.5% of the combined entity’s share capital.
The merger is anticipated to result in cost synergies, including the reduction of overlapping roles. Estimates suggest that 5–7% of the combined workforce, equating to up to 2,300 jobs, may be affected over a three-year period. However, the final number could be lower due to existing vacancies and natural staff turnover.
Aviva’s CEO, Amanda Blanc, has emphasized that the acquisition aligns with the company’s strategy to focus on core markets in the UK, Ireland, and Canada.
The deal is expected to enhance Aviva’s scale and capabilities in personal lines insurance, providing customers with competitive pricing and improved service offerings.
The completion of the acquisition is subject to regulatory approvals and is expected to occur by mid-2025. Both companies have expressed confidence in the strategic benefits of the merger and are working towards a smooth integration process.
