(Bloomberg) -- Direct Line Insurance Group Plc said its board unanimously rejected a bid from Ageas, describing the offer as “uncertain” and “unattractive.”

The Belgian insurer said in a regulatory filing Wednesday that “it is in the preliminary stages of considering a possible offer” to acquire all of Direct Line. The statement detailed a cash-and-stock deal that values the UK firm at approximately £3.1 billion ($3.9 billion), a premium of 42.8% to the Tuesday closing price.

Direct Line said in a separate statement that it had considered the Jan. 19 proposal and unanimously rejected it on Jan. 29. The transaction “significantly undervalued Direct Line Group and its future prospects while also being highly opportunistic in nature,” the UK firm said, advising shareholders to take no action in relation to the possible offer.

Shares in Direct Line, which had a market value of £2.1 billion as of Tuesday’s close, rose 24% as of 15:55 p.m. in London. 

The statements followed an earlier Bloomberg report that Ageas had made an approach to buy Direct Line in recent weeks that was rejected. 

Bank of America is advising Ageas, according to the firm’s statement. Goldman Sachs, Morgan Stanley and RBC Capital Markets were listed on Direct Line’s statement.

Ageas offered 100 pence in cash for each Direct Line share and one new Ageas share for every 25.24047 Direct Line shares, according to the statements.

The Belgian firm said in the statement that it “firmly believes that the combination of Ageas’ and Direct Line’s UK businesses will be beneficial for both Ageas and Direct Line shareholders.”

Initial Public Offering

The UK insurer was created through an initial public offering from Royal Bank of Scotland’s insurance division in 2012. 

The takeover bid for the UK motor insurer comes at a time of leadership transition. Adam Winslow, the former Aviva UK chief, is taking over as permanent CEO in March after Chief Executive Officer Penny James stepped down last year after an unexpected increase in weather-related claims. 

Since her departure the firm has been shoring up its balance sheet. It sold its brokered commercial insurance unit to Intact Financial for £520 million in October.

“Adam Winslow will take up the role as CEO on 1 March,” the Direct Line statement said. “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.”

UK Insurers

A successful bid by Ageas would add to a list of UK insurers bought by overseas acquirers in recent years. In 2020, a consortium led by Intact bought UK insurer RSA. One year later Finnish insurer Sampo bought home and motor insurer Hastings. 

Ageas houses insurance assets previously owned by Fortis, the Belgian financial services giant bailed out during the 2008 financial crisis. Led by Chief Executive Officer Hans De Cuyper, It offers property and casualty and life insurance in countries including Belgium, France and Portugal. 

Last year, the Belgium insurer was itself the subject of takeover speculation after BE Group, an investment firm fronted by former bankers, made a fresh takeover attempt.

(Updates with Direct Line response.)

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