Aviva Plc faces a review by the UK’s merger watchdog into its plan to buy Direct Line Insurance Group Plc for roughly £3.7 billion ($4.9 billion) in a deal that would create the UK’s largest motor insurer.
The Competition and Markets Authority said Wednesday it opened a so-called Phase 1 inquiry, a procedural step that gives the regulator up to 40 working days to assess the transaction’s potential impact on competition. The deadline for this stage is July 10.
The CMA also said it’s seeking feedback until May 29 on the tie up, which would combine the companies’ UK insurance operations — covering a wide range of products such as car and home insurance. If the CMA finds concerns, the firms would have a chance to submit concessions to ward off the threat of a deeper probe.
Combined, Direct Line and Aviva could surpass their biggest motor insurance competitor Admiral, according to some estimates. Bloomberg Intelligence has said previously that the deal could double Aviva’s share in that market.
Bromley, England-based Direct Line sells insurance under its eponymous brand as well as through units including Churchill, Green Flag, Privilege and Darwin Motor Insurance. In addition to car insurance, it also offers home, travel, pet and life insurance as well as offering cover for businesses.
Photograph: The Direct Line website; photographer: Hollie Adams/Bloomberg
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Topics Mergers & Acquisitions
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