In a joint statement, Aviva Plc and Direct Line Insurance Group have said they have reached preliminary agreement in relation to Aviva’s potential acquisition of Direct Line. Aviva has upped its initial offer of £2.50 per Direct Line share to £2.75, amounting to approximately £3.6bn. Aviva now has until 25th December to confirm its intention to make good on the offer.

Announcing the agreement, the firms said in a joint statement: “The Board of Direct Line remains confident in Direct Line's prospects as a standalone company and continues to have conviction in the capabilities of the newly established leadership team to deliver the announced strategy.

“That said, the Board of Direct Line has carefully considered the Proposal with its advisers and consulted with Direct Line shareholders during the offer period, and has concluded that the Proposal is at a value that it would be minded to recommend to Direct Line shareholders should a firm intention to make an offer pursuant to Rule 2.7 of the Code be announced on such financial terms, subject to agreement of all other terms and conditions of an offer and completion of reciprocal customary due diligence.”