UK's Direct Line surges after rejecting Aviva's $4.16 bln takeover offer
Adds details of Direct Line share move in paragraphs 3 and 4
Nov 28 (Reuters) -Shares in UK's DirectLine Insurance DLGD.L soared over 36% in early trade on Thursday after it rejected a 3.28 billion pound ($4.16 billion) takeover offer from bigger rival Aviva AV.L, saying it "substantially undervalued" the company.
The insurer, which made the announcementafter market hours on Wednesday, topped gains on the FTSE 250 mid-cap.FTMC index, while Aviva's shares fell about 3% to be the top percentage loser on the blue-chip FTSE 100 .FTSE index.
Shares in Direct Line, which have fallen about 13% so farthis year, surged as much as 39% to a more than eight-month high of 220 pence in early trade.
The stock is still trading below the proposed offer price of 250 pence-a-stock from Aviva.
According to British takeover rules, Aviva has until Dec. 25 to make a firm offer or walk away.
Jefferies analysts said thatthey believed that a higher bid might be forthcoming if Direct Line's board considers engaging with Aviva.
Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Abinaya Vijayaraghavan and Sonia Cheema
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