Blanc scores a direct hit: Aviva boss’ attack on rival should not be a big surprise, says ALEX BRUMMER

The turnaround at Aviva under the leadership of CEO Amanda Blanc has been extraordinary.

Redundant foreign companies have been sold, the money returned to shareholders and Blanc has built up an investment war chest.

The decision to make a bid for Direct Line, the company that revolutionized the way car insurance is sold, shouldn’t come as a huge surprise.

Direct Line, founded by insurance entrepreneur Peter Wood, has fallen into decline in recent times, left in the dust by other general insurance innovators, most notably Cardiff-based Admiral.

Aviva’s offer price of 250p per share, a 57.5 percent premium to the closing share price, places a value of £3.3 billion on Direct Line and was intended as a knockout bid that would bring chairman Danuta Gray and CEO Adam Winslow, an emigrant from Aviva, in conversation.

But since last night there was no communication. By going public, Blanc has effectively become hostile.

Aviva shareholders will be reassured that the new ambition of Britain’s strongest insurance brand will not affect promises made to return capital to investors.

In terms of size, Aviva, with a market value of £13.1 billion, is a giant to the dwarf of Direct Line. Nevertheless, the deal is important in the insurance world, with Direct Line talking about just under 9 million policies.

Not all insurance contracts go well. The agreed merger of Royal Insurance and Sun Alliance, back in the 1990s, was a flop that left an indelible mark on the sector.

The current proposed deal is essentially a rescue for a company that is going through tough times. But even generous premiums above market value have been rejected by shareholders of British-listed companies this year.

Blanc and her team are not home and dry yet.

Royal plunder

The record of key British industries falling into overseas hands is not a happy one. There is hardly a day when Thames Water is not in the news, due to labyrinthine finances, leaking pipes and seeping sewage. Parts of the British car industry, such as BMW’s Mini, do work.

But the foreign ownership of Vauxhall and Ford, both of which are in decline in Britain, means decisions about jobs in the EV era are made in the Netherlands (nominal headquarters of Stellantis) and Detroit.

Despite this unfortunate experience, Business Secretary Jonathan Reynolds is showing no inclination to intervene in Czech billionaire Daniel Kretinsky’s £3.6 billion bid for Royal Mail owner International Distribution Services.

It is hoped that Reynolds and his business department have delved deeply into Kretinsky’s past Eastern European business dealings and those of his partners in the bidding EP Group.

Reynolds may not feel sentimental about the sale of Britain’s oldest company. However, the multi-layered, expensive financing by a consortium of foreign banks, like that of Thames Water, is an invitation to financial plunder at the expense of consumers.

We know from other foreign takeovers that promises about jobs, investment and modernization may seem watertight, but are unenforceable because business conditions are changing so quickly.

Labor may feel it has joined the good guys in passing the Royal Mail deal in the name of foreign investment. It threatens to contribute to a financial doom run.

Crosbie coup

Debbie Crosbie’s choice of Virgin Money has proven to be a smart one. A disappointing half-year for Nationwide, the UK’s largest mutual finance group, is masked by a £2.3bn payday following the bank’s purchase.

Nationwide’s coup illustrates the folly of the boards of FTSE 350 companies selling themselves for what appears to be a generous premium when the underlying value is so much greater.

As things stand, it seems certain that even though Nationwide’s first-half profits fell 43 percent to £568 million, members can expect a ‘fairer share’ after Virgin Money’s windfall.

Virgin shareholders and customers have reason to feel insulted. Virgin’s board has sold them short and borrowers and savers will see Nationwide customers benefit while receiving nothing.

It does not suit Nationwide, which sings so loudly from its common hymn sheet that Virgin Money customers are treated as second-class citizens. Disappointing.