LV will NOT be sold to US private equity giant after £530m deal is not backed by enough members of the 178-year-old mutual insurance firm
- Firm’s members voted 69.4% in favour of deal with Bain – but 75% was needed
- Chairman Alan Cook announced he will step down ‘once way forward is agreed’
- It came after members questioned why the company could not remain a mutual
- MPs and experts had argued sale to Bain would see the company sell its history
LV will not be sold to US private equity giant Bain Capital after a £530million deal was not backed by enough members of the 178-year-old mutual insurance firm.
The company’s 1.1 million members voted 69.4 per cent in favour of the deal with Bain but 75 per cent was needed for the bid to pass.
Following the vote, chairman Alan Cook announced his resignation, saying he will step down ‘once the way forward is agreed’.
It came after a lengthy meeting in which members questioned why the company could not remain a mutual.
LV, once known as Liverpool Victoria, was founded in 1843. It has always been structured as a mutual, meaning it is owned by its members.
The proposal had angered MPs, experts and LV’s own policyholders, who argued that a sale to Bain would see the firm sell its history and principles down the river.
Following the vote, LV chairman Alan Cook (pictured above) announced his resignation, saying he will step down ‘once the way forward is agreed’
Chairman Alan Cook said: ‘We are deeply appreciative of the members who took the time to vote.
‘Our priority has always been to put the interests of LV=’s members first, and, in particular with-profits policyholders, who share in the group’s risks.
‘Although 69 per cent of voting members supported the board’s recommendation and voted in favour of the transaction with Bain Capital, the board is disappointed not to have achieved the outcome that we believed was in the best interests of LV= and its members.’
He added: ‘I will continue to lead the process to find a way forward quickly that will enable us to provide the right financial outcome for growing our business whilst respecting individual members… once the way forward is agreed I will step down as chairman.
‘Our fundamental responsibility has always been and will always remain ensuring the best interests of our members.’
LV’s suitor Bain Capital said: ‘We were invited by the board into this process and out of 12 bids the board unanimously selected ours as the best offer in December 2020.
‘Whilst approximately 70 per cent of LV=’s members voted for our proposal, we respect this outcome is not enough for our transaction to proceed.
‘Our proposal for LV= was deemed to be the best for members, enabling LV= to grow, reduce its debt and maintain its proud heritage.
The company’s 1.1 million members voted 69.4 per cent in favour of the deal with Bain but 75 per cent was needed for the bid to pass (file photo)
‘It remains crucial that members are looked after and protected. We have always wanted LV= to flourish and become a leading company in the sector, that offers more consumer choice and creates more jobs.’
During the meeting, it became clear that members who asked questions were disappointed that LV would lose its mutual status after 178 years and many of the comments were focused on the topic.
But the board said: ‘The benefits of remaining a mutual was outweighed by the plans for the deal.’
Chief executive Mark Hartigan insisted that without the deal cash from members would be needed to invest, which would be unfair as many would not see the benefit in the long term.
He said: ‘The issue here is for sustainable and long-term capital and we don’t have access to that. It’s in the estate and it would be unfair for the board to take that capital from the members.’
The proposal had angered MPs, experts and LV’s own policyholders, who argued that a sale to Bain Capital would see the firm sell its history and principles down the river (file photo)
The boss added: ‘The issue is how can we access capital when we can’t borrow any more and it’s unfair to take it from our members.’
Questions were also asked about the reported £43million the proposed takeover cost, which was explained away with high legal and advisor costs.
The board was also asked about why it rejected a bid from rival mutual Royal London, which was one of 12 companies involved in the auction process.
It was revealed that Royal London did not make a final bid for LV and Mr Hartigan said Bain’s bid was higher.
He added: ‘Royal London was proposing to leave material liabilities (and) higher uncertain costs.’
Other members questioned whether the board would be in line for big bonuses for pushing through the deal but the company said there were no bonuses due specifically in relation to the deal.