REG - Direct Line Ins Grp Aviva PLC - Joint Statement Regarding Possible Offer

AvivaAnnouncement

06/12/2024 07:00

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RNS Number : 0752P  Direct Line Insurance Group PLC  06 December 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

 

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS
AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM
INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO
CERTAINTY THAT AN OFFER WILL BE MADE

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

FOR IMMEDIATE RELEASE

 

6 December 2024

Aviva plc ("Aviva")

 

Direct Line Insurance Group plc ("Direct Line")

 

Joint Statement Regarding Possible Offer

 

Aviva and Direct Line announce that they have reached preliminary agreement on
the financial terms of a potential acquisition of the entire share capital of
Direct Line by Aviva (the "Proposal").

 

Based on Aviva's last closing share price before the offer period started,
being 489.3 pence per Aviva share, the Proposal represents total consideration
valued at

 

275 pence per Direct Line share

 

to be delivered as:

o  129.7 pence per Direct Line share in cash, funded through Aviva's
internally available cash resources;

o  0.2867 new Aviva shares per Direct Line share; and

o  dividend payments of up to 5 pence per Direct Line share in aggregate (the
"Permitted Dividend"), to be paid (subject to the approval of the Board of
Direct Line) prior to completion.

 

This represents a premium of:

o  73.3% to the closing Direct Line share price on 27 November 2024 (being
the last closing share price before the offer period commenced); and

o  49.7% to the six month volume-weighted average Direct Line share price to
27 November 2024.

 

The Board of Direct Line remains confident in Direct Line's prospects as a
standalone company and continues to have conviction in the capabilities of the
newly established leadership team to deliver the announced strategy. That
said, the Board of Direct Line has carefully considered the Proposal with its
advisers and consulted with Direct Line shareholders during the offer period,
and has concluded that the Proposal is at a value that it would be minded to
recommend to Direct Line shareholders should a firm intention to make an offer
pursuant to Rule 2.7 of the Code be announced on such financial terms, subject
to agreement of all other terms and conditions of an offer and completion of
reciprocal customary due diligence.

 

Direct Line shareholders would own approximately 12.5% of the issued and to be
issued share capital of Aviva. The Direct Line Board believes that, in
addition to the attractive headline value per share, the combination would
provide the opportunity to deliver significant synergies, creating substantial
additional value for both sets of shareholders.

 

Aviva believes in the strong strategic and financial logic for a combination
of Direct Line into the Aviva group, details of which were set out in Aviva's
announcement of 27 November 2024.

 

The announcement of any firm offer under Rule 2.7 of the Code in respect of
the potential acquisition of Direct Line is subject to the satisfaction or
waiver of a number of customary pre-conditions, including the completion of
confirmatory due diligence. The acquisition would be subject to customary
conditions and terms to be set out in the firm offer announcement under Rule
2.7 of the Code. For the purposes of Rule 2.5(a)(i) of the Code, this
announcement has been made with the consent of Aviva. Aviva reserves the right
to waive any pre-conditions to announcing an intention to make a firm offer
pursuant to Rule 2.7 of the Code.

 

In accordance with Rule 2.5(a) of the Code, Aviva reserves the right to
introduce other forms of consideration and/or vary the mix or composition of
consideration of any offer. In addition, Aviva reserves the right to make an
offer for Direct Line at a lower value or on less favourable terms than the
Proposal: (i) with the agreement or recommendation of the Board of Direct
Line; (ii) if a third party announces a firm intention to make an offer for
Direct Line which, at that date, is of a value less than the value of the
Proposal; or (iii) following the announcement by Direct Line of a Rule 9
waiver transaction pursuant to Appendix 1 of the Code or a reverse takeover
(as defined in the Code). If Direct Line declares, makes or pays any dividend
or distribution or other return of value or payment to its shareholders other
than the Permitted Dividend, Aviva reserves the right to make an equivalent
reduction to the Proposal.

 

In accordance with Rule 2.6(a) of the Code, Aviva must, by no later than 5.00
pm on 25 December 2024, either announce a firm intention to make an offer for
Direct Line under Rule 2.7 of the Code or announce that it does not intend to
make an offer, in which case the announcement will be treated as a statement
to which Rule 2.8 of the Code applies. This deadline will only be extended
with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the
Code.

 

There can be no certainty that any firm offer will be made, even if the
pre-conditions referred to above are satisfied or waived.  A further
announcement will be made in due course.

 

The person responsible for arranging the release of this announcement on
behalf of Aviva is Susan Adams, Group Company Secretary, and on behalf of
Direct Line is Jane Poole, Chief Financial Officer.

 

-ends-

 

Enquiries:

 

Aviva - Media

Andrew
Reid
+44 (0)7800 694 276

Sarah
Swailes
+44 (0)7800 694 859

 

Aviva - Investors and Analysts

Greg
Neilson
+44 (0)7800 694 564

Joel von
Sternberg
+44 (0)7384 231 238

Michael
O'Hara
+44 (0)7387 234 388

 

Citigroup Global Markets Limited (Joint Financial Adviser and Joint Corporate
Broker to Aviva):

Peter Brown / Sian Evans / Peter Catterall / Michael
Lamb                       +44 (0) 20 7986 4000

 

Goldman Sachs International (Joint Financial Adviser and Joint Corporate
Broker to Aviva):

Anthony Gutman / Nimesh Khiroya / Bertie
Whitehead                             +44 (0) 20
7774 1000

 

 

 

Direct Line

 

Dhruv Gahlaut,
CFA
+44 (0)7385 481177

Chief Strategy & Investor Relations Officer

Email: dhruv.gahlaut@directlinegroup.co.uk
(mailto:dhruv.gahlaut@directlinegroup.co.uk)

 

Paul
Smith
            +44 (0)7795 811263

Investor Relations Officer

Email: paul.r.smith@directlinegroup.co.uk
(mailto:paul.r.smith@directlinegroup.co.uk)

 

Morgan Stanley (Joint Lead Financial Adviser and Joint Corporate Broker to
Direct Line)

Ben Grindley / Laurence Hopkins / Melissa Godoy / Jonathan
Gold         +44 (0) 20 7425 8000

 

Robey Warshaw (Joint Lead Financial Adviser to Direct Line)

Simon Robey / Chetan Singh / Kunal
Ranpara
+44 (0) 20 7317 3999

 

RBC Capital Markets (Joint Financial Adviser and Joint Corporate Broker to
Direct Line)

Oliver Hearsey / Daniel Ohana / Elliot
Thomas
+44 (0) 20 7653 4000

 

Brunswick Group (PR Adviser to Direct Line)

Nick Cosgrove / Diana Vaughton / Freya
Semken                                   +44
(0) 20 7404 5959

 

 

Important notices

 

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities whether
pursuant to this announcement or otherwise.

 

Overseas jurisdictions

The distribution of this announcement in jurisdictions outside the United
Kingdom may be restricted by law and therefore persons into whose possession
this announcement comes should inform themselves about, and observe, such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities law of any such jurisdiction.

 

Inside information

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014 (as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 as amended by
virtue of the Market Abuse (Amendment) (EU Exit) Regulations 2019). Upon
publication of this announcement, this inside information will be considered
to be in the public domain.

 

Disclaimer

Citigroup Global Markets Limited ("Citi"), which is authorised by the
Prudential Regulation Authority and regulated in the UK by the Financial
Conduct Authority and the Prudential Regulation Authority is acting as
financial adviser exclusively for Aviva and for no one else in connection with
the matters described in this announcement, and will not be responsible to
anyone other than Aviva for providing the protections afforded to its clients
nor for providing advice in relation to the matters referred to in this
announcement. Neither Citi nor any of its affiliates, directors or employees
owes or accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, consequential, whether in contract, tort, in delict, under
statute or otherwise) to any person who is not a client of Citi in connection
with this announcement, any statement contained herein or otherwise.

 

Goldman Sachs International, which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the United Kingdom, is acting exclusively for Aviva
and no one else in connection with the matters referred to in this
announcement and will not be responsible to anyone other than Aviva for
providing the protections afforded to clients of Goldman Sachs International,
or for providing advice in connection with the matters referred to in this
announcement.

 

Morgan Stanley & Co. International plc ("Morgan Stanley"), which is
authorised by the Prudential Regulation Authority ("PRA") and regulated by the
PRA and the Financial Conduct Authority ("FCA") in the United Kingdom, is
acting exclusively for Direct Line and for no one else in connection with the
possible offer and neither Morgan Stanley nor any of its affiliates, nor their
respective directors, officers, employees or agents will be responsible to
anyone other than Direct Line for providing the protections afforded to its
clients or for providing advice in relation to the possible offer, the
contents of this announcement or any other matters referred to in this
announcement.

 

Robey Warshaw LLP, which is authorised and regulated in the United Kingdom by
the FCA, is acting as financial adviser exclusively for Direct Line and no one
else in connection with the matters referred to in this announcement and will
not regard any other person as its client in relation to the matters referred
to in this announcement and will not be responsible to anyone other than
Direct Line for providing the protections afforded to clients of Robey Warshaw
LLP, nor for providing advice in relation to the matters referred to in this
announcement.

 

RBC Europe Limited, which is authorised by the PRA and regulated by the PRA
and the FCA in the United Kingdom, is acting exclusively for Direct Line and
for no one else in connection with the possible offer and neither RBC Europe
Limited nor any of its affiliates, nor their respective directors, officers,
employees or agents will be responsible to anyone other than Direct Line for
providing the protections afforded to its clients or for providing advice in
relation to the possible offer, the contents of this announcement or any other
matters referred to in this announcement.

 

Forward-looking statements

This announcement (including information incorporated by reference in this
announcement), oral statements made regarding the Proposal, and other
information published by Aviva or Direct Line may contain statements about
Aviva and Direct Line that are or may be deemed to be forward looking
statements. All statements other than statements of historical facts included
in this announcement may be forward looking statements. Without limitation,
any statements preceded or followed by or that include the words "targets",
"plans", "believes", "expects", "aims", "intends", "will", "may", "shall",
"should", "anticipates", "estimates", "projects", "is subject to", "budget",
"scheduled", "forecast" or words or terms of similar substance or the negative
thereof, are forward looking statements. Forward looking statements include
statements relating to the following: (i) future capital expenditures,
expenses, revenues, earnings, synergies, economic performance, indebtedness,
financial condition, dividend policy, losses and future prospects; (ii)
business and management strategies and the expansion and growth of Aviva's or
Direct Line's operations and potential synergies resulting from the Proposal;
and (iii) the effects of government regulation on the wider Aviva group's or
the wider Direct Line group's business.

 

Such forward looking statements are prospective in nature and are not based on
historical facts, but rather on current expectations and projections of the
management of Aviva or Direct Line about future events, and are therefore
subject to risks and uncertainties that could significantly affect expected
results and are based on certain key assumptions. Many factors could cause
actual results to differ materially from those projected or implied in any
forward looking statements, including: the impact of ongoing uncertain
conditions in the global financial markets and the national and international
political and economic situation generally, market developments and government
actions, changes in or inaccuracy of assumptions in pricing and reserving for
insurance business (particularly with regard to mortality and morbidity
trends, lapse rates and policy renewal rates), longevity and endowments, a
cyclical downturn of the insurance industry, the impact of natural and
man-made catastrophic events (including pandemics) on business activities and
results of operation, the transitional, litigation and physical risks
associated with climate change, failure to understand and respond effectively
to the risks associated with sustainability, regulatory approval of changes to
internal models for calculation of regulatory capital under the UK's version
of Solvency II rules, the impact of recognising an impairment of our goodwill
or intangibles with indefinite lives, changes in valuation methodologies,
estimates and assumptions used in the valuation of investment securities, the
effect of legal proceedings and regulatory investigations, the impact of
operational risks, including inadequate or failed internal and external
processes, systems and human error or from external events and malicious acts
(including cyber attack and theft, loss or misuse of customer data), increased
competition, the loss of or damage to one or more key customer relationships,
changes to habits, the outcome of business or industry restructuring, the
outcome of any litigation, changes in global, political, social, business and
economic conditions, changes in the level of capital investment, currency
fluctuations, changes in interest and tax rates, changes in market prices,
changes in laws, regulations or regulatory policies, developments in legal or
public policy doctrines, technological developments, the failure to retain key
employees, or the timing and success of future offer opportunities or major
investment projects and the impact of any acquisitions or similar
transactions. Other unknown or unpredictable factors could cause actual
results to differ materially from those in the forward looking statements.
Such forward looking statements should therefore be construed in light of such
factors. Neither Aviva, Direct Line nor any of their respective associates or
directors, officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in any
forward looking statements in this announcement will actually occur. Due to
such uncertainties and risks, readers are cautioned not to place undue
reliance on such forward looking statements, which speak only as of the date
hereof. All subsequent oral or written forward looking statements attributable
to any member of the Aviva Group, Direct Line Group. or any of their
respective associates, directors, officers, employees or advisers, are
expressly qualified in their entirety by the cautionary statement above. Aviva
and Direct Line expressly disclaims any obligation to update any forward
looking or other statements contained herein, except as required by applicable
law or by the rules of any competent regulatory authority, whether as a result
of new information, future events or otherwise.

 

Publication on a website

A copy of this announcement will be made available, subject to certain
restrictions relating to persons in restricted jurisdictions, on Direct Line's
website at https://www.directlinegroup.co.uk
(https://www.directlinegroup.co.uk) and on Aviva's website at www.aviva.com
promptly and in any event by no later than 12 noon (London time) on 9
December 2024. The content of the website referred to in this announcement is
not incorporated into and does not form part of this announcement.

 

 

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