Direct Line rejects £3.1bn takeover approach from Belgium's Ageas

The terms of the "highly conditional, non-binding indicative proposal" comprised 100p in cash and one new Ageas share for every 25.24 Direct Line shares. As at closing on Tuesday, this implies a value of 233p per share.

"The board considered the proposal with its advisers and considered it to be uncertain, unattractive, and that it significantly undervalued Direct Line Group and its future prospects while also being highly opportunistic in nature," the company said.

The proposal was unanimously rejected by the board on 29 January.

"The board is confident in Direct Line Group's standalone prospects given its strong strategic position, powerful brands, and robust capital position," it said. "Adam Winslow will take up the role as CEO on 1 March. He is tasked with refreshing the strategy and operational focus of the group with the clear objective of returning to a sustainable level of operating profit over time."

Direct Line said there can be no certainty that any firm offer will be made.

In a statement earlier, Ageas said the proposed deal "offers a unique opportunity to unlock significant value and deliver accretion to Ageas' operational capital generation through the delivery of substantial operational and capital synergies".

"Based on Ageas' outside-in analysis undertaken to date, it sees potential to drive operational improvements and efficiencies through the sharing of best-practices and the removal of overlapping overhead costs after the integration of Ageas' and Direct Line's UK businesses," it said.

"In the medium term, the proposed transaction is expected to deliver a highly attractive return on the equity capital invested. The benefits from the proposed transaction are also expected to increase the enlarged group's financial and strategic flexibility, underpinning its progressive dividend ambitions."

At 1530 GMT, Direct Line shares were up 24% at 202.50p.