Direct Line rejects improved possible offer by Ageas

Ageas has submitted an improved possible offer to the Board of Directors of Direct Line to acquire the entire issued and to be issued share capital of the insurer, but the company’s Board has again rejected the offer and expressed confidence in its standalone prospects.

Brussels headquartered insurer Ageas confirmed in late February that it was in the initial stages of considering a possible offer to acquire UK insurer Direct Line, which was rejected by the firm on the basis the offer was unattractive and highly opportunistic.

The terms of the initial offer comprised 100 pence in cash and one new Ageas share for every 25.24047 Direct Line shares. As at closing on 27 February 2024, the Proposal implied a value of 233 pence per Direct Line share.

Today, Ageas confirmed the submission of an improved possible offer, under which Direct Line shareholders would receive 120 pence in cash for each Direct Line share, and one newly issued Ageas share for every 28.41107 Direct Line shares.

Based on a Sterling to Euro exchange rate of 1.1705 and the closing price of Ageas shares on 12 March 2024, being the last date prior to the date of this announcement, the improved possible offer has an implied value of 239 pence per Direct Line share, representing a premium of 46% to 163.35 pence, being the undisturbed closing share price per Direct Line share on the business day prior to the announcement of the initial offer.

The improved possible offer values the entire issued and to be issued ordinary share capital of Direct Line at approximately £3.171 billion.

Hans De Cuyper, Chief Executive Officer, Ageas, said: “We have made a compelling possible offer that represents a substantial premium to Direct Line’s undisturbed share price. Our Improved Possible Offer delivers substantial cash proceeds to Direct Line shareholders, whilst ensuring they benefit from the material value creation that we believe the combination of the UK businesses of Ageas and Direct Line will deliver. We look forward to engaging with the Direct Line Board of Directors on the terms of our Improved Possible Offer.”

Direct Line has responded, and said that while the Board considered the latest proposal with its advisers, it continues to believe the latest proposal is uncertain, unattractive, and that it significantly undervalues Direct Line and its future prospects while also being highly opportunistic in nature. Accordingly, the Board unanimously rejected the Latest Proposal.

“The Board is confident in Direct Line Group’s standalone prospects,” says the firm.

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