Royal London eyes LV merger if Bain Capital deal collapses

It is thought Royal London’s proposed merger would see LV retain its status as a mutual

Royal London is reportedly planning to propose a full merger deal with LV, if its rival’s planned acquisition by Bain Capital collapses. 

According to This is Money, Royal London chief executive Barry O’Dwyer is set to launch a proposal offer to LV’s board if Bain Capital’s £530m offer does not receive shareholder approval on 10 December. 

The current Bain deal has been labelled ‘controversial’ as it would see LV give up its status as a mutual and instead be managed for profit. The deal would see LV’s 1.2 million members receive £100m in return for the move. 

However, according to This is Money, Royal London’s proposed merger would see LV retain its status as a mutual. It is thought that following the merger Royal London would look to see the LV business with Allianz expected to be a likely suitor after it acquired LV’s general insurance business in a £1bn deal last year. 

The paper also cited that industry experts believe that if the Bain Capital deal does not receive approval from shareholders next month, LV could “quickly run out of options”. 

The Bain deal was agreed back in December of 2020, which at the time represented a multiple of 0.9x for the solvency II own funds of £606m as at September 2020.

At the time of the deal Mark Hartigan, CEO of LV, said: “The partnership with Bain Capital recognises the opportunity to further invest to develop LV= at a time when it is well positioned, growing market share, expanding its products and trading resiliently, despite the pandemic. While our corporate structure will change, our culture and values remain the same.

“The board is excited by the opportunities it creates for our people, partners and customers – enabling the LV= brand and business to further develop as a major force in the UK life insurance market.”

Matt Popoli, global head of Insurance at Bain Capital Credit, said: “We are delighted by the opportunity to provide long-term support to LV=’s Board of directors and management team on this transaction, which delivers certainty and value to LV=’s members.

“We are investing in a unique company with an impressive management team and employee base, that is already well positioned in the market, with a clearly established product set, strong IFA relationships and a reputation for customer excellence.”

He added: “We have been impressed by LV=’s initiatives to further improve its market position, the benefits of which are already emerging.”

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