Ageas mulls £3.1bn bid for Direct Line, shares surge

In a statement to the London Stock Exchange, Ageas said it was in the preliminary stages of considering an offer for the insurer.

It continued: “Ageas firmly believes that the combination of Ageas’ and Direct Line’s UK businesses will be beneficial for both Ageas and Direct Line shareholders, providing a meaningful opportunity to unlock shareholder value through the delivery of significant operation and capital synergies.”

The possible offer would see shareholders receive 100p per share in cash alongside one newly-issued Ageas share for every 25.24 Direct Line shares.

Ageas said that based on Tuesday’s closing price, the bid had an implied value of 233p per share, valuing the entire issued and to be issued ordinary share capital at £3.095bn.

By 1300 GMT, shares in Direct Line had surged 27% to 207p.

Direct Line declined to comment. However, earlier on Wednesday Bloomberg reported that it had already rejected an approach from Ageas, made earlier in the month.

Direct Line was founded in 1985, and was the first to offer car insurance direct to customers, rather than through brokers.

It was acquired by the insurance division of Bank of Scotland in 2003 before being spun out via an initial public offering in 2012.

As well as Direct Line, it owns the Churchill, Green Flag and Privilege brands.