Aviva aims to complete the Direct Line deal before Christmas

Aviva and Direct Line are locked in takeover talks this weekend ahead of the Christmas Day bid deadline.

FTSE 100 insurer Aviva has until 5pm on December 25 to make a firm offer, agree to an extension or walk away after taking on its smaller rival last month.

Direct Line’s board has told shareholders it would back a £3.6 billion takeover bid after rejecting an earlier £3.3 billion approach.

That was the third bid for the troubled insurer in less than 12 months, with Direct Line – which also owns Churchill and Green Flag – fending off a takeover attempt from Belgian rival Ageas this year.

And it came as another blow to London’s stock market, which saw a mass exodus of companies in 2024. Insurers are expected to update the market tomorrow.

Following the proposed deal, Direct Line shareholders would own around 12.5 percent of the enlarged group, which would be Britain’s largest car insurer after Admiral.

Direct Line chief executive Adam Winslow joined the struggling company from Aviva in March with the aim of turning around the company’s fortunes.

He replaced Penny James who was ousted after a profit warning. Winslow has cut costs by £100 million by focusing on core activities and cutting 550 jobs. On Friday he announced a deal with Compare the Market, the comparison site run by his father Peter Winslow.

He also previously drew up a plan to pay out approximately 60 percent of company profit as regular dividends. Aviva boss Dame Amanda Blanc’s attempt to take over Direct Line pits her against her former colleague. The two are said to have ‘bad blood’ after Winslow left Aviva for Direct Line.

If the takeover goes through, he is expected to leave. A City source previously told the Mail on Sunday that ‘there is no way he is staying’.

Since taking over as Aviva boss in 2020, Blanc has revived the insurer’s fortunes with a series of deals. Potential areas for expansion, including the protection and health branch.