UK competition watchdog OK's PS4 billion Direct Line buy by Aviva

The UK Competition & Markets Authority on Tuesday green lit Aviva PLC’s takeover of Bromley, London-based car and home insurer Direct Line Insurance Group PLC.

London-based insurer Aviva in December had agreed to buy Direct Line in a deal worth £3.7 billion at the time and now worth just over £4 billion.

Aviva’s cash-and-shares offer was worth 257 pence per Direct Line share when made public on December 6. Direct Line shareholders will receive 0.2867 of an Aviva share, 129.7p in cash, and up to 5p in dividend payments for each Direct Line share.

However, Aviva shares have risen by 27% since then.

Aviva shares on Tuesday morning in London were up 0.5% on the day at 622.00p for a market capitalisation of £16.59 billion.

That makes the offer for Direct Line worth about 313.03p, including the 5p dividend.

Direct Line shares were up 0.3% to 307.40p on Tuesday in London, giving the company a market cap of £4.02 billion.

The CMA had opened an inquiry into the acquisition in May, and on Tuesday announced it will not refer the deal to a phase 2 investigation.

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