The UK’s Competition and Markets Authority (CMA) has launched a review of Aviva’s proposed £3.7bn acquisition of Direct Line. The investigation could delay the deal, which was agreed upon in December.
Aviva’s £3.7bn Takeover Could Reshape the UK Insurance Market
The CMA aims to determine whether the merger would reduce competition in the insurance sector. The deal would make Aviva a dominant force in the UK car insurance market. This potential shift in market power has raised concerns among regulators.
The CMA will publish the results of its initial investigation in July. If it finds significant issues, a more detailed phase two probe could follow.
The takeover would significantly boost Aviva’s market value. Once merged, the company would compete with major players like Legal & General and Prudential. Aviva shareholders would control around 87.5% of the new firm. Direct Line shareholders would own the remaining 12.5%.
Together, the two companies would account for more than 20% of the UK’s home and motor insurance market. The new entity would offer a broad range of policies across car, home, pet, and other areas.
Direct Line’s portfolio includes well-known brands like Churchill and Green Flag. The merger would combine these with Aviva’s existing services, expanding its reach even further.
In December, JP Morgan analysts suggested the deal was unlikely to trigger regulatory issues. Despite that, the CMA has raised concerns. It stated the merger could lead to a “substantial lessening of competition” in UK markets.
The regulator is now collecting opinions from stakeholders. Individuals and companies affected by the deal can submit feedback until 29 May. These insights will help the CMA assess how the merger might impact consumers and the wider industry.
Aviva has not yet issued a statement in response to the investigation. The company may address the situation once the CMA’s findings are released.
If approved, the deal would transform the competitive landscape of UK insurance. However, the CMA’s probe shows that large mergers will continue to face close scrutiny to protect market fairness and consumer choice
