UK insurance giant Aviva has signed a deal to acquire peer Direct Line via a £3.7 billion cash-and-stock transaction. The combined entity will become the largest provider of home and motor insurance across the UK.

The negotiation went through several rounds. Direct Line turned down Aviva’s initial £3.28 billion bid in November for undervaluation. The two sides reached a preliminary agreement worth £3.6 billion in early December before finalizing the £3.7 billion deal. Upon completion, Aviva shareholders will hold 87.5% of the merged group, while Direct Line shareholders will take a 12.5% stake.