LV= has issued a robust defense of its proposed deal with Bain Capital after another weekend of media speculation.
There are reports Royal London could propose a merger deal with LV=’s board if members vote against the sale to Bain Capital on 10 December.
The mutual’s board has been fighting hard to get the £530m sale to private equity investors over the line.
The details released today (22 November) aim to build on those that came out over the course of November.
There have been several prominent interventions over the course of the month to convince LV= members the deal is in their best interest.
On 1 November LV= chairman Alan Cook had a meeting with the all-party parliamentary group for mutuals (APPGM).
There he insisted the company would “be the same business”, even if its planned sale to Bain Capital, and its resultant demutualisation, goes through.
Then on 15 November Bain Capital released an update where it outlined several improvements on the original offer.
The following day LV= rebuffed claims that Royal London will play any part in its proposed acquisition by Bain Capital.
It was reported Royal London, which had its bid for LV= rejected last year, came up with a proposal with Bain Capital that involves carving up LV=.
According to the update just released, under the Bain Capital option, the board estimates that the total capital returned to members over time would be £616m.
This comprises £212m of capital available for distribution to members through the transaction with Bain Capital.
Also another £404m consisting of the remaining proceeds from the sale of the General Insurance business.
The update also counters what it calls a “misleading comparison” in the press between the “relative size of the £100 one-off payment” for all members under the proposed deal compared other demutalisations.
It adds: “The total return to 271,000 LV= with-profit members following both the sale of the General Insurance business and the transaction with Bain Capital is £533m over time.
“Consistent with precedent demutualisations, with-profit members are receiving the greatest portion of the distributions with non-profit members receiving a fixed payment upfront.”
Commenting on the forthcoming vote, LV= chairman Alan Cook says: “There have been numerous theories and opinions about the process and decision. So that members can vote with the facts in front of them, we are showing the analysis we did and the conclusions we reached.
“We urge members to vote at the meetings on 10 December and vote in favour of the transaction with Bain Capital to protect both their interests and the future of LV=.”