Shares in Direct Line tumbled this morning after the insurance group confirmed that it had received and rejected a second takeover offer from a European rival.

The revised terms of the cash and shares offer from Belgium's Ageas, received on March 9, implies a value of 237p per Direct Line share. This compares to an implied value of 233p per share in an initial offer rejected by Direct Line on February 28.

"The board considered the latest proposal with its advisers and continues to believe the latest proposal is uncertain, unattractive, and that it significantly undervalues Direct Line Group and its future prospects while also being highly opportunistic in nature," the company said. "Accordingly, the board unanimously rejected the latest proposal."

READ MORE: Major Scottish employer Direct Line rebuffs takeover bid

Direct Line is the UK's second-largest motor insurance group with approximately 1,000 employees in Scotland, the majority of whom are employed out of Direct Line House in Glasgow's Cadogan Street. Its other brands include Churchill, Green Flag, Privilege, Darwin, NIG, and DLG.

The group has been hit by sluggish profits as the industry has struggled amid higher prices for used cars, more expensive parts, and longer repair times. Direct Line was also hit at the end of last year by £30 million in compensation payments to customers who were overcharged when they renewed their car or home insurance.

The company is now under the stewardship of chief executive Adam Winslow, who took up the post at the beginning of this month following last year's departure of Penny James.

READ MORE: Direct Line to pay out £30m to overcharged home and car insurance customers

In a research note last month after the first takeover approach, analysts at Jefferies said Ageas would likely need to make an offer of 270p to 300p per share in order for it to be accepted. Hans De Cuyper, chief executive of Ageas, described the latest offer of 237p as "compelling". 

"Our improved possible offer delivers substantial cash proceeds to Direct Line shareholders, whilst ensuring they benefit from the material value creation that we believe the combination of the UK businesses of Ageas and Direct Line will deliver," he added.

Shares in Direct Line fell by more than 9% in early trading but regained some lost ground and were trading 5% lower as of mid-day.