Direct Line Takeover: £120m Payday for Advisers

Introduction

Aviva's £3.6 billion acquisition of Direct Line has resulted in a £120 million payday for banks, lawyers, and advisers involved in the deal.

Advisers to Direct Line

Direct Line has paid out £49.5 million to its advisers, including:
* Robey Warshaw (£24.5 million)
* RBC Capital Markets
* Morgan Stanley

Advisers to Aviva

Aviva has spent £70.2 million on advisers for the deal, including:
* Goldman Sachs
* Citi

Deal Details

The deal, agreed in December 2022, involves Aviva acquiring Direct Line for £3.6 billion in cash and shares. This acquisition will strengthen Aviva's position in the UK insurance market and expand its coverage into areas such as pet insurance, breakdown cover, and small business insurance.

Benefits to Aviva

Aviva anticipates cost savings of £125 million annually through the merger. Additionally, the acquisition is expected to boost returns for investors.

Job Losses

As part of the merger, over 2,000 jobs will be eliminated due to overlapping positions.

Timetable

Direct Line shareholders will vote on the merger on March 10, with the transaction expected to be completed by mid-2023.

Direct Line's Situation

Direct Line initially declined Aviva's offer but later accepted a sweetened proposal. Despite turnaround efforts, its directors felt the market undervalued the business.

Historical Background

Direct Line was established in 1985 as the insurance arm of the Royal Bank of Scotland. It was the first UK insurer to sell policies directly to customers. Aviva's roots date back to the mutual society Hand in Hand, formed in 1696. Through mergers and acquisitions, it has become the UK's largest insurer.