What happened? Aviva has announced it made a non-binding offer to acquire DLG on the 19th November, which was rejected by DLG''s Board on the 26th November. The offer comprised 112.5p per share in cash and 0.282 new Aviva shares per DLG share, implying an acquisition price of GBP2.50 per share, or a 58% premium to the market close. For context, DLG''s board also declined a previous offer from another insurer for GBP2.37 in March this year. BNPP Exane View: As per this morning''s note UK Motor: What''s not in the price?, we saw a potential acquisition as a backstop to DLG''s valuation. This offer from Aviva is at a 26% premium to our Target Price for DLG, but a c.20% discount to our ''blue sky'' valuation. While the bid has been rejected, we would not be surprised if Aviva were to make a further offer. It is also at least possible that today''s announcement catalyses other potential acquirors to make an approach. Aviva previously indicated its market share in UK personal motor was 8% and 12% in home. We estimate that DLG has 12 and 10% share in motor and home respectively, and so we expect that anti-trust constraints will be limited. We would expect DLG''s shares to outperform tomorrow morning, while Aviva''s share price may lag given the size of the acquisition premium.