Legal action could derail LV’s £530m private equity takeover even if bosses win vote
Legal challenge: LV ‘s controversial takeover could be derailed even if its 1.2m customers give it the green light
The fate of LV will be decided today as its members vote on a controversial takeover. But the deal could be derailed even if LV’s 1.2m customers give it the green light with opponents preparing a legal challenge.
Bosses at the 178-year-old life insurer are set on selling it to US private equity shark Bain Capital in a £530million deal.
But the proposal has angered MPs, experts and LV’s own policyholders, who argue that a sale to Bain would see the firm sell its history and principles down the river. 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.
This allows it to be run entirely for their benefit, rather than to make money for a profit-hungry shareholder.
But private equity firms like Bain buy businesses for their own gain, and are notorious for slashing jobs and hiking prices.
Members are worried that LV’s service will tumble if the firm falls into Bain’s hands. LV’s customer-members have been voting on the deal for the past several weeks. Members will still be able to cast their ballot at today’s online meeting, which starts at 2pm.
But even if the required 75 per cent of voters wave the deal through, a group of disgruntled members have hired law firm Leigh Day and top barrister David Chivers QC to challenge the shoddy communications from LV’s top brass.
The Mail understands Chivers and representatives from Leigh Day met with the City watchdog, the Financial Conduct Authority, to set out their concerns yesterday.
Chivers is planning to shine a spotlight on the £100 payout which LV is offering to each of its members – which several have branded ‘paltry’ – to give up their ownership of the company.
Bain has admitted that it decided to pay out to all members because it hoped the lure of £100 would persuade more to vote in its favour.
But Chivers claims that LV chief executive Mark Hartigan and chairman Alan Cook never had the right to offer the blanket payout.
Instead, he argues, all of the money which Bain was offering to buy LV should have gone solely to the 297,000 members who own more generous ‘with-profits’ policies – giving them another £85million between them.
It should then have been up to those policyholders to decide whether they wanted to share out the money with other members.
LV has knocked back this claim, as its ‘independent expert’ – paid for by the firm – does not agree that the deal should be classified in the same way as Chivers thinks.
But if members back the deal, Chivers is planning to put his arguments in front of a judge, who must approve Bain’s takeover of LV before it can go ahead.