LV= rejects new Royal London offer and stands by £530m Bain takeover
Mutual insurer Liverpool Victoria has turned down the latest offer from its competitor Royal London which had proposed dismantling the business, amid increasing criticism over a £530m proposed takeover which would end the firm’s member-owned status.
LV= has been pushing its members to vote to allow the controversial takeover deal by US private equity firm Bain Capital to go ahead.
Today the mutual insurer confirmed that its board received an email from Royal London, the UK’s biggest mutual life insurance company, over the weekend. In a statement the insurance company noted that the renewed offer from Royal London, whose earlier bid was rejected, came “almost a full year after our transaction with Bain Capital was announced.”
Royal London proposed a deal to Bain Capital last week which would have mean splitting parts of LV= with the US firm. In an email to LV= chief executive, Mark Hartigan, it was suggested that Royal London could acquire some LV= policies, with Bain spinning off the remainder of the business into a separate entity, according to a report by The Mail on Sunday.
But the LV= board said they still “unanimously recommend the transaction with Bain Capital” to their members, ahead of a special general meeting on 10 December.
“Despite having every opportunity,” said LV= chairman Alan Cook, “Royal London failed to submit a superior best and final offer, and therefore the board unanimously concluded that the better value, certainty, investment and structure of Bain Capital’s proposal would be in the best interests of our members.”
“The board of LV= is clear that at no point have any of Royal London’s proposals included an offer for membership rights or continuation of mutuality for LV= members, contrary to media speculation. Given this context, the board of LV= believes it is unfair and misleading to characterise any proposal from Royal London as preserving mutuality or offering a real mutual alternative.”
Cook said the board were “surprised and disappointed” by the timing of Royal London’s communication and accused the insurer of trying to “destabilise” LV= plans.
But Royal London have since said in a statement: “We do not want to break up LV and would be delighted if the LV board would engage in discussions.”
The insurer said that “staying mutual is an option if LV makes this a priority and engages in talks with us.”
“LV members have an important choice to make,” said Royal London chief executive Barry O’Dwyer.
“I call on the LV board to engage with us to explore how LV customers can continue to have their life savings protected and invested by a mutual,” he continued.
The proposed takeover deal of LV= has come under increased scrutiny after the mutual insurer announced that its members would receive just £100 each from the sale, which will end LV’s status as a mutual after 178 years.
LV= has since been hard at work trying to persuade members that the offer was the best one on the table, but the insurer did not disclose the details of other offers it had considered. LV= today revealed that Royal London offered £10m more than Bain, at £540m.