LONDON (ShareCast) - (Sharecast News) - The competition watchdog is to investigate Aviva's planned £3.7bn takeover of Direct Line Insurance Group, it confirmed on Wednesday.
The blue chip insurer announced in December it had agreed to acquire its smaller rival after an earlier £3.3bn offer was rebuffed.

The tie-up will create a major player in the motor insurance, covering around 20% of the UK market.

Shareholders backed the deal in March, but on Wednesday the Competition & Mergers Authority confirmed it was opening an investigation into the deal.

It has therefore asked interested parties to comment, and will then assess whether the tie-up could result in a "substantial lessening of competition".

The deadline to comment by is 29 May, with findings due to be published in July.

Under the terms of the deal as it currently stands, Aviva shareholders would own around 87.5% of the new company, while Direct Line investors would hold around 12.%.

As well as it eponymous brand, Direct Line also owns Churchill and Green Flag.

As at 0930 BST, shares in both Aviva and Green Line were largely flat, at 575p and 289.4p respectively.

Both companies have yet to comment on the CMA's announcement.

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