Financial Services

Published: December 17, 2021 | Updated: February 9, 2022

Royal London back in the frame as bid by Bain Capital to acquire LV= fails to pass threshold

LV= County Gates site in Bournemouth.
By Andrew Diprose, editor

Plans by US private investment giant Bain Capital to acquire LV= for just over a half a billion pounds lie in tatters.

Instead the Board of the mutual life pensions and investments group is to consider an unsolicited preliminary merger proposal from Royal London.

LV=, which has a base at County Gates in Bournemouth and employs several hundred people in Dorset, had previously declined an offer by Royal London in favour of Bain Capital.

The dramatic turn of events came after a vote by LV= members.

Although 69 per cent of members who voted supported the special resolution to approve the acquisition of the LV= business by Bain Capital, the result was below the required 75 per cent threshold.

As a result the proposed transaction with Bain Capital was abandoned.

Just 15 per cent – 174,240 – of LV=’s 1.16 million members took part in the vote.

The Board of LV= expressed disappointment at the result which it argued was in the best interests of LV= and its members.

In a statement it promised to swiftly reassess its strategic options and explore alternative ways to provide the best long-term outcome for members, the business, employees and its wider communities.

Revealing he would step down as soon as a way forward was agreed, Alan Cook, Chairman, pictured left, said: “The Board remains committed to finding a solution to the challenges presented by a declining With-profits membership base.

“Therefore, as we move into 2022, I will continue to lead the process to find a way forward that will enable us to provide the right financial outcome for all our members whilst respecting their different wishes.

“As a Board, our fundamental responsibility has always been, and will always remain, ensuring the best interests of our members.

“We are also deeply aware of our duty of care to LV=’s people and we will continue to do everything possible to find a solution that can deliver a continuation of the LV= brand and security for our 1,300 employees.

“The business is trading strongly and remains appropriately capitalised.

“As well as driving an improved trading performance, our CEO, Mark Hartigan, has delivered on the Board’s requirements throughout this strategic process.

“The Board continues to provide its absolute and full support to his ongoing work to address the long term challenges facing LV=.”

LV= subsequently confirmed it had received an approach from Royal London.

A statement said: “LV= can confirm it has received an unsolicited preliminary merger proposal from Royal London.

“The proposal, which is on a substantively different structure to the offer received during the process in 2020, now includes the possibility of continued mutuality and is conditional on exclusive discussions.

Our December 2020 story.

“The outline proposal from Royal London is at an early stage and is subject to discussion, due diligence and detailed negotiation of financial and other terms.

“There can be no certainty that a transaction will be agreed.

“The Board will consider this proposal seriously and undertakes to update members as soon as practicable.

“In evaluating the Royal London proposal, the Board will continue to have regard to members and stakeholders best interests.”

Founded in 1861, Royal London is the UK’s largest mutual life, pensions and investment company.