(Alliance News) - Ageas SA on Wednesday described its fresh bid approach for Direct Line Insurance Group PLC as "compelling".

Ageas Chief Executive Hans De Cuyper said the improved possible offer "delivers substantial cash proceeds to Direct Line shareholders, whilst ensuring they benefit from the material value creation that we believe the combination of the UK businesses of Ageas and Direct Line will deliver".

But the Bromley, England-based motor and home insurer rejected the modestly improved terms, calling them "unattractive".

Direct Line said the latest proposal, received on Saturday, comprised 120 pence in cash and one new Ageas share for every 28.4 Direct Line share.

At the closing share price last Friday, the day before the proposal was received, this implied a value of 237p per Direct Line share. The offer would value all of Direct Line around GBP3.07 billion.

Ageas said the new offer valued each Direct Line share at 239p, as per closing share prices on Tuesday.

It described the offer as "compelling", noting an increased cash element and pointing out that share element would give Direct Line shareholders 20% ownership of the enlarged Ageas group.

Ageas said it will continue to seek engagement from the Direct Line in order to "work collaboratively" towards a recommended bid.

Late February, Ageas made an initial approach with an implied a value of 233p per Direct Line share and 231p currently, so the new offer represents a 2.6% improvement.

In response to the latest rejected bid, shares in Direct Line were down 4.6% to 215.40p each in London midday Wednesday.

Shares in Ageas were up 0.6% to EUR39.77 each in Brussels.

Direct Line described the Ageas proposal as "uncertain" and "unattractive", and said it "significantly undervalues" Direct Line and its future prospects.

Direct Line said it was "confident" in its stand alone prospects.

The insurer will release its 2023 results on Thursday next week, when it will provide an update on further initiatives to build on the operational improvements implemented during 2023.

On Saturday, the Times newspaper said new Chief Executive Adam Winslow intends to announce plans to rein in costs and boost profitability alongside the results.

Winslow is expected to have to scrutinise the cost base of the insurer, which is widely seen as being higher than rivals, and look at ways to differentiate its brands, which include Direct Line, Churchill and Privilege, which sells through price comparison websites, the Times said.

The business also owns the Green Flag recovery service for drivers.

Winslow, who joined from Aviva PLC, took up the role as chief executive on March 1.

He is tasked with refreshing the strategy and operational focus of the group with the clear objective of returning to a sustainable level of operating profit over time.

By Jeremy Cutler, Alliance News reporter

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