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(Alliance News) - Ageas AG on Friday said it has withdrawn a proposed bid for Direct Line Insurance Group PLC after failing to secure the backing of its UK peer.
The Belgian insurer had made two proposals to buy the Bromley, England-based motor and home financial services group, but its advances were rejected.
Ageas Chief Executive Hans De Cuyper said: "We had hoped to reach agreement on a jointly recommended firm offer together with the Direct Line board. However, I am convinced that given the circumstances we took the right decision not to make an offer, staying true to who we are and what we stand for in terms of maintaining a friendly approach and respecting our financial discipline."
Ageas stressed it had always sought engagement with Direct Line's board and regretted it has not been able to work "collaboratively" towards a recommended offer.
Ageas said it was not able to identify additional elements based on publicly available information that would justify significant adjustments to the terms of its possible offer. Therefore, consistent with its financial discipline, it has decided not to make a bid.
In response, Direct Line reiterated its confidence in the group's standalone prospects.
"The board believes under Adam Winslow's leadership the company is well-positioned to drive material improvement in performance that is expected to unlock significant value for Direct Line group shareholders," Direct Line said in a statement.
Late February, Ageas made a cash and shares bid approach, valuing each share in Direct Line at 233 pence per share. In March, it made a second proposal, worth 239p per share.
Shares in Direct Line closed down 0.6% at 210.49p in London on Friday.
Direct Line rejected both, describing them as "uncertain" and "unattractive", significantly undervaluing its future prospects.
On Thursday, Direct Line announced plans to save GBP100 million and boost insurance margins, as newly installed Chief Executive Adam Winslow sought to mark his mark.
Winslow, who joined the Bromley, England-based motor and home insurer from Aviva PLC, acknowledged Direct Line needs to "significantly improve" its performance as he set a new insurance margin target of 13% by 2026. It had previously targeted 10% "over time".
Winslow, who plans to complete a strategic review by July, said the firm had a "strong platform to build from" with some of the "most recognisable brands in the market."
By Jeremy Cutler, Alliance News reporter
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