Direct Line in advanced talks to sell German and Italian units: sources
LONDON (Reuters) - British insurer Direct Line is in advanced talks with several industry players to sell its operations in Germany and Italy, two sources close to the deal said.
At least four suitors have submitted non-binding bids for both of the units, which sell motor insurance through the Direct Line brand, said one of the sources who cannot be named because the talks are private.
The combined value of Direct Line's German and Italian business stands at around $500 million, said the second source.
Goldman Sachs has been hired as an adviser to Direct Line. The sale will involve another round of binding bids before a final buyer is selected in late September, the sources said.
Direct Line, which has a market capitalisation of 4.13 billion pounds ($7.03 billion), was not available for immediate comment. Goldman Sachs declined to comment.
Deal activity in the insurance sector has ramped up this year, helped by the stock market listing of Dutch insurer NN Group, Europe's biggest initial public offering (IPO) of 2014.
A sale of its Italian and German businesses would leave Direct Line with a presence only in Britain.
The company, whose brands also include Churchill, Privilege and the Green Flag roadside recovery service, was spun off from Royal Bank of Scotland in an IPO last year.
The company gets more than 40 percent of its revenue from motor insurance and about 25 percent from home insurance. It also offers travel and pet cover.
Direct Line, which has been active in Germany and Italy for more than 10 years, increased its overall annual group pretax profit to 424 million pounds in 2013 from 249 million pounds in 2012.
($1 = 0.5877 British pounds)
(Additional reporting by Freya Berry; Editing by Pravin Char)