LV= has assertively rebuffed claims that Royal London will play any part in its proposed acquisition by Bain Capital.
In a statement issued this morning (16 November) the mutual’s board seeks to draw a line under media reports that emerged over the weekend.
These said that Royal London, which had its bid for LV= rejected last year, has come up with a proposal with Bain Capital that involves carving up LV=.
The statement just issued confirms that an e-mail was received from Royal London last week which proposed the dismantling of LV=.
But the board said it continues to unanimously recommend the transaction with Bain Capital to its members ahead of the Special General Meeting on 10 December.
This is because the proposed deal from Bain Capital offers superior value for policyholders and the future of the business.
According to LV=’s board, Royal London offered a marginally higher headline value of £540m but wanted to leave material liabilities in respect of the non-profit business with LV=’s With-Profit Fund.
Additionally it claims Royal London’s proposal included higher and less certain administration and investment management costs.
It adds: “Importantly, Royal London’s proposal would not have resulted in LV= members having any membership rights in the enlarged mutual group, consistent with its precedent acquisitions of other mutuals. To describe Royal London’s proposal as offering ‘a mutual alternative, more favourable to LV= members’, is grossly misleading.”
The update follows one released on 15 November from Bain Capital that outlined several aspects of the deal it claims are an improvement on the original offer.
These include increasing the number of policyholders from 1.2 million to over two million and an extra £160m of investment in IT modernisation.
Commenting on Royal London’s bid, LV= chairman Alan Cook says: “Despite having every opportunity, 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.”
He adds: “We are also surprised and disappointed by the timing of Royal London’s intervention, which comes more than a year after we terminated our confidential discussions and is seeking to destabilise the conclusions of our comprehensive strategic review, in close proximity to what is a very important vote for our members.
“Given our Special General Meeting on 10 December, we are seeking to clear up the fog for our members and remove all the uncertainty and confusion that has been created for our members ahead of what is a very important vote. The board of LV= continues to unanimously recommend the transaction with Bain Capital to its members ahead of the Special General Meeting on 10 December.”
