Aviva has concluded its £3.7 billion acquisition of Direct Line, creating a major player in the UK motor insurance market. As part of the deal, the company is giving £500 in free shares to its 32,000 employees, which includes 23,000 at Aviva and 8,500 at Direct Line. The shares will vest in three years.
The merger, which the Competition and Markets Authority cleared earlier this week, combines two of the UK’s most recognised insurance brands. Direct Line, known for its namesake brand as well as Churchill and Green Flag, will now bolster Aviva’s position, covering more than 20% of the UK motor insurance market.
Despite the growth prospects, concerns loom over job security, with Aviva having previously flagged 2,300 potential job cuts as part of a plan to achieve £125 million in cost savings annually.
Aviva’s financial terms included cash and stock options, valued at 129.7 pence per Direct Line share, plus a dividend for Direct Line shareholders. The result is that Aviva shareholders now control 87.5% of the combined company.
