Direct Line shares sank more than 10 per cent on Monday as investors reacted to Belgian suitor Ageas’ decision to walk away from its takeover efforts.
It was confirmed after market close on Friday that Ageas would not make another offer for Direct Line after two snubbed attempts.
Direct Line said that its board was ‘confident in the group’s standalone prospects’.
Driven off: Ageas said it would not make another offer for Direct Line after two snubbed attempts
The last takeover attempt from the Brussels-based insurer on 13 March valued Direct Line at 237p per share or £3.2billion. The insurer blasted the latest offer, labelling it ‘unattractive’.
It is a boost for chief executive Adam Winslow, who insisted the company he joined weeks ago had a ‘very successful future’.
The news will also be a shot in the arm for the City after electricals retailer Currys also fought off foreign predators this month.
But Direct Line shares were down 13.3 per cent to 181.3p approaching midday, paring back gains over the last year to just under 30 per cent.
The shares had been supercharged by Ageas’ takeover interest but remain almost 50 per cent lower than five year ago.
New boss Winslow last week set out his plans to revive Direct Line’s fortunes in his first set of results since taking the helm.
Direct Line opted to bring back its dividend despite posting a huge increase in losses, as it unveiled a cost-cutting programme and a ‘comprehensive strategy review’.
It plans to save £100million a year by the end of 2025 and hiked its net insurance margin target – the amount it makes from selling policies after payouts – to 13 per cent by 2026.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: ‘Recent takeover news has propped up the shares, and they’ve remained at those elevated levels despite the board rejecting the offer.
‘Yes, performance is improving and guidance at least offers a glimpse of hope for better things to come.
‘But there’s still a question about whether that’s more to do with a better market in general, than Direct Line’s own doing. Restoring investor confidence doesn’t happen overnight, but there have been some early steps in the right direction.’
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