LV mounts a desperate bid to close £ 530m private equity acquisition deal as it slammed into each other for lack of transparency


LV mounts a desperate bid to close £ 530m private equity acquisition deal as it slammed into each other for lack of transparency


The bosses US has started a last-ditch effort to push for private equity in LV through mutual selling.

In what the critics branded as ‘desperate’, life insurers finally revealed details of the strategic review that brought LV to Bain Capital’s jaw.

LV’s board said the review was “cautious and detailed” and that selling the company to Bain was a good way to go.

‘Desperate’: LV finally discloses details of strategic inspection that caused life insurers to jawbone Bain Capital

But experts criticized each other for failing to be completely transparent on a number of issues, including:

  • How many jobs can be eliminated from LV under Bain’s ownership;
  • What fees LV has collected on attorneys, bankers and other consultants during the inspection and planned sale;
  • Chief Executive Mark Hartigan (pictured) can offer Bain what incentive he has;
  • How members’ interests work under a rival bid from fellow Royal London;

Labor MP Gareth Thomas, chairman of the All-Party Parliamentary Group on Mutuals, said LV’s statement was “a desperate attempt to turn around the figures that members already know.”

LV, formerly known as Liverpool Victoria, is owned by each other – ie, its 1.2m customers.

It was founded in 1843, offering ‘penny policies’ in Liverpool to give poor families the opportunity to bury their dead.

Its reciprocity is that it is run entirely for the benefit of members rather than making money for shareholders and has become a major attraction for consumers over the years.

But if LV is sold to Bane, as the board wishes, the business will remove its reciprocal status and be taken away by profit-hungry investors.

Members are being asked to vote on the agreement – they have until December 8 to cast their ballot or vote online or do so at an online meeting on December 10.

The sale was thought last year after bosses hired consultants to conduct a strategic review. In an update to members yesterday, LV said the review concluded that the firm was “a sub-standard life and pension business with a strong capital structure.”

Pressure: Mark Hartigan (pictured), chief executive of rival Royal London LV, urges reopening of talks

Pressure: Mark Hartigan (pictured), chief executive of rival Royal London LV, urges reopening of talks

The review concluded that LV’s business as usual was ‘not legitimate for members’, as the firm would have to use some of the money set aside for their future payments to invest in its technology.

More than half of the 271,000 LV customers have policies with profits – meaning they share in the company’s fortunes – because their policies will see them mature over the next decade, at which point LV will have to pay.

The firm claims to be worried that if they use their money to invest, they will have to reduce their payments because they don’t get the money back in time.

But experts have challenged why LV is not fat for a rival contribution from Royal London.

Royal London has urged LV boss Hartigan to reopen the talks and has also proposed building a deal that will allow the firm to remain mutually exclusive. LV has refused to communicate.

Peter Hunt, Mutuals Consultancy Mutuo, said: ‘Hartigan says the Bain deal is the only way to keep LV in business, but it also puts him at work. And if LV is a big British company as they say, why sell it to Americans?

‘It’s impossible to get information from LV. It’s like a Kafka novel. ‘

The Bain deal has come under intense criticism from members and experts who worry that US private equity will milk LV for money by cutting shark jobs and raising prices. Members were given a ‘shameful’ £ 100 to give up the company.

As he tried to explain yesterday’s strategic review, LV President Alan Cook said: ‘Members can vote with the facts in front of them, we are showing the analysis we have done and the conclusions we have reached.

‘We urge members to vote on December 10 and vote in favor of protecting their interests and the future of LV.’

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