LV rejects bid from rival Royal London as it accuses it of lobbing ‘hand grenade’

LV= has accused its biggest rival of lobbing a ‘hand grenade’ to try to disrupt its sale to private equity firm.

The 178-year-old mutual insurer blasted Royal London for bidding £540million for it – £10million more than Bain Capital.

The firm slammed its larger competitor for allegedly trying to derail the sale with just weeks to go before a vote of its 1.2million members on December 10.

LV said the proposal from its rival would see the business split up and cause redundancies and closures among its sites in Bournemouth, Exeter and Hitchin.

Chief executive Mark Hartigan said he was ‘disappointed’ with the timing of Royal London’s move and urged members to back Bain’s deal.

He said the latest proposal was a ‘hand grenade to disrupt the process’, adding: ‘How extraordinary that halfway through the voting process and we get this intervention.’

He continued: ‘Royal London had every opportunity to offer a better deal than Bain and they didn’t.’

He added: ‘They (Royal London) made very clear that the success of their bid relies on synergies and that means redundancies.’

For the first time LV revealed the financial details of Royal London’s approach, confirming the group was offering £540million – higher than Bain’s £530million.

But it said the competitor had made a fresh approached last week that had ‘significant headcount reductions’.

LV said it was previously unable to release the details due to a non-disclosure agreement, but said the Bain deal remained the only formal offer on the table.

Bosses said it was ‘grossly misleading’ for Royal London to describe its proposal as a ‘mutual alternative’, stressing any such deal would still lead to demutualisation.

The firm is currently mutual, meaning it is owned by its 1.2million member-customers.

LV also claimed Royal London did not want members to vote on its proposal. Royal London insisted LV remaining a mutual ‘is an option’ under its approach.

It added: ‘We do not want to break up LV and would be delighted if the LV board would engage in discussions.’

Royal London boss Barry O’Dwyer said the proposed Bain deal caused ‘near universal dismay’.

He told the Today programme: ‘We think that hundreds of thousands of people invested their life savings with LV= partly because it was a mutual, and therefore we think that they should do everything possible to retain that status.

‘If there is an option available to them to join forces with another mutual to preserve that heritage and to make sure that those customers continue to get what they bought, then they should explore that fully,’ he said.

‘It’s really difficult for LV= members and observers to believe that a US private equity company is going to safeguard member benefits and UK jobs more than a UK mutual does. I just don’t believe that that’s credible.’

He added: ‘My message to LV= is: Let’s talk. There must be a better way.’

Chief executive Mark Hartigan (pictured) said he was ‘disappointed’ with the timing of Royal London’s move and urged members to back Bain’s deal

It marks the latest twist in the takeover tussle, which has taken centre stage as politicians united to hit out at the deal.

Concerns are growing over the group’s future in the hands of a private equity firm and the payouts being offered to members, as well as the motives behind the sale.

Under the Bain deal, they would hand over ownership of the group and receive £100 each while with-profits members will be given a boost when their policies mature.

Some members have dismissed the payout as being ‘paltry’. LV’s board agreed to the Bain capital deal after receiving around a dozen expressions of interest.

Mr Hartigan, who believes the only way the firm can survive is if it stops being a mutual, urged members to ‘cut through the media storm’.

He said: ‘Believe me when I say that this is the best and only deal that saves the future of LV.’

He said the 1,400 staff at LV were ‘extremely worried that the deal we are asking members to vote on is being undermined’.

But there has been speculation over rewards and guaranteed roles offered to Mr Hartigan and management by Bain should the deal go through.

For the first time LV revealed the financial details of Royal London’s approach, confirming the group was offering £540million – higher than Bain’s £530million

Mr Hartigan admitted he had held discussions with Bain over a management incentive plan.

But he dismissed suggestions he is in line to personally gain from the deal as ‘frankly fanciful and ridiculous’.

Members will be asked to have their say on December 8 or at an online meeting on December 10.

Seventy-five per cent of votes are needed to back the takeover and a minimum turnout of 50 per cent.

There are concerns over plans to push through a rule change that will mean it can override the minimum turnout threshold.