Direct Line Insurance Group said it rejected the 3.28 billion pounds ($4.16 billion) takeover approach from insurer and asset manager Aviva as it substantially undervalued the company. Describing the approach as highly opportunistic,

Direct Line’s shares surged as investor’s hoped the rejection might pave the way for a second takeover bid from the U.K.’s largest insurance company

Goldman Sachs Group Inc. has switched sides to advise Aviva Plc on its £3.3 billion ($4.2 billion) takeover bid for Direct Line Insurance Group Plc, only eight months after helping the target successfully defend against another suitor.

Direct Line’s new boss, Adam Winslow, is a former executive at Aviva and the two insurers have large shareholders in common such as Schroders and Redwheel.

Direct Line rejected Aviva's £3.3billion bid, whereby shareholders would receive £1.12p a share in cash and 0.28 of a new Aviva share for every Direct Line share held.

Goldman Sachs is advising Aviva on its bid for Direct Line just eight months after helping its target fend off a bid from Belgian firm Ageas.

Aviva has contacted shareholders in Direct Line Group (DLG) to convince them to reconsider its takeover offer. That was according to the Financial Times (FT), which said that the move “could pave the way for a hostile takeover bid for its smaller rival”.

James Daley is concerned the takeover will reduce competition and lead to even higher insurance premiums, which have rocketed in recent years.