LV’s new interim chair reveals Royal London merger talks are ongoing after failed Bain bid for the mutual
- Bain’s £530m offer was rejected after failing to meet the 75% voter threshold
- Royal London said that there was ‘no certainty’ that a transaction would occur
- LV chairman Alan Cook is to be replaced on a interim basis by Seamus Creedon
Royal London and LV remain in discussions over a potential deal, which could lead to a takeover or a merger of the two financial services firms.
Little other information on current discussions was provided by either firm and Britain’s largest mutual insurer Royal London said there was ‘no certainty’ that a transaction would occur.
Royal London offered to begin discussions regarding a possible tie-up, which would preserve LV’s status as a mutual insurer, following the failed takeover of LV by Bain Capital two months ago.
Uncertain: Royal London said there was ‘no certainty’ a transaction involving LV would occur
It had previously bid for LV – formerly Liverpool Victoria – when the insurer went up for sale in 2020, with an offer that was £10million higher than Bain Capital’s, though the board of LV went with the latter proposal.
The £530million Bain offer was highly controversial among campaigners and MPs, given the private equity firm’s history of leveraged buyouts and asset stripping of companies, many of which have subsequently gone bankrupt.
In addition, the takeover would have meant LV was no longer owned by its 1.2 million policyholders, who would have also received payouts of just £100. Further concerns were raised that it would lead to poorer customer service and job losses.
To the delight of many policyholders and critics, the bid failed after receiving approval from 69 per cent of voters, six percentage points short of the threshold needed to pass.
Following the vote, bosses at LV said it would review whether to keep the company as a standalone mutual or pursue a merger with another mutual organisation.
Chairman Alan Cook pledged to lead the company through that review, but announced that he would leave the business ‘as soon as a way forward is agreed.’.
Change: Following the failed Bain takeover, LV chairman Alan Cook announced that he would leave the company. He is to be replace from April on an interim basis by Seamus Creedon
Today, it was revealed that LV non-executive director and former Reliance Mutual chairman Seamus Creedon would become his successor on an interim basis from the start of April alongside other changes to its board.
He said: ‘We felt it right to take time to understand the message members gave the board.
‘Put simply, our members told us that what they viewed as the modest financial advantages of the transaction, were not worth the loss of ownership and voting rights for our million-plus members.’
He added: ‘We share a common interest with Royal London in a healthy and vibrant mutual sector so that we can both compete fairly with shareholder-owned firms.
‘We have had, and continue to have, discussions with Royal London about if and how we can co-operate to the benefit of both sets of members and the mutual sector.
‘In the meantime, we will continue to strengthen our independent business for the benefit of our existing and future policyholders.’
Founded in a London coffee house 161 years ago this month, Royal London became a mutual insurer in 1908 and grew to manage funds worth £130billion as of June 2019, according to its website.