Aviva and Direct Line have announced that they plan to cut up to 2,300 jobs as a result of the purchase. The companies will also be reducing their employee base by up to 7%.
Aviva, UK’s largest life insurer, will pay the equivalent of 2.75 PS for each Direct Line Share, as the combined companies look to save PS125m.
Job losses are likely to occur over a period of three years.
Aviva and the other firm had reached an agreement earlier in December. Aviva was given until Christmas Day to submit a formal bid or withdraw under takeover regulations.
Direct Line employs 10,100 people, while Aviva has 23,000 employees.
The overlap of roles in the combined insurance operations is where jobs will be lost. The two firms’ spokespeople added that jobs in the back office computers and corporate and head offices were duplicated.
The estimated integration costs are around PS250 million, mainly due to redundancy pay.
Companies said that they would likely cut between 5% to 7% of their combined employee base. This would be between 1,600 to 2,300 jobs from 33,100.
The firms said that the net number of job losses will eventually be lower. Aviva has 800 vacancies at the moment and turnover is 1,300 employees per year.
Direct Line, which initially rejected Aviva’s bids for the deal, said in an earlier statement that it would likely endorse a definitive offer of at least PS3.6bn.
Amanda Blanc, CEO of Aviva, said: “This is a great deal for customers and Direct Line shareholders.”
It builds on our four-year track record of strong financial performance, and in line with our strategic growth, it accelerates capital-light business.
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