Up to 2,300 jobs will be put at risk in the wake of Aviva’s purchase of Direct Line, with the companies saying they will cut up to 7% of their combined employee base.
Aviva, the largest life insurance firm in the UK, will offer the equivalent of £2.75 for each Direct Line share as the combined firms look for £125m in cost cuts.
The job losses were likely to take place over three years.
An agreement between the two firms had been reached earlier in December, and Aviva had until Christmas Day to make a formal offer or walk away under takeover rules.
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According to their last annual reports, Aviva employed 23,000 people while Direct Line employed 10,100.
Where jobs would be lost is in overlapping roles across combined insurance operations. Spokespeople for the two firms added that there duplicated jobs running back office computer systems, and in corporate and head office roles.
Integration costs were thought to be in the region of £250 million and made up primarily of redundancy payments.
The companies said they were likely to cut between 5% and 7% of the combined group’s employee base, which would amount to between 1,600 and 2,300 jobs out of 33,100.
Eventually the number of net job losses would be lower, said the firms, given that Aviva currently had 800 vacancies and turned over 1,300 staff annually.
Although Direct Line rebuffed Aviva’s initial bids, it said earlier this month it was likely to endorse a definite offer for at least £3.6bn.
“This deal is excellent news for the customers and shareholders of Aviva and Direct Line,” said Aviva CEO Amanda Blanc.
“It builds on our track record of delivering four years of strong financial performance and, in line with our strategy, it accelerates our growth in capital light business.”
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