Life insurer LV has set out its most detailed defense to date of its decision to accept a takeover bid from US private equity group Bain Capital, saying the deal would enable it to return £ 616 million in capital to its members .
Members and politicians have expressed concern over the sale of one of the UK’s oldest life insurers, which is jointly owned by a private equity firm. Critics have argued that the payments offered to common members in the Bain deal are not good value, while senior management will be well rewarded.
Bain’s £ 530m bid was selected over competitive proposals last year. The board argued Monday that Bain would provide expertise and capital investment not available among the other offerings, as well as retain LV’s presence in Bournemouth, Hitchin and Exeter.
The company’s strategic review last year concluded that it needed an investment that would place an unnecessary burden on members, while its heavy debt burden limited its ability to exploit external creditors, the company said Monday.
“There were numerous theories and opinions about the process and decision. “So that members can agree with the facts before them, we show the analysis we have done and the conclusions we have reached,” said chairman Alan Cook.
Members vote to approve the deal on Dec. 10, by which time management must convince three-quarters of eligible members to support it.
LV said the Bain deal would result in an additional £ 212 million of capital being distributed to members in addition to the pot raised from the sale of LV’s general insurance business to Allianz in 2017 and 2019.
“This equates to about a 50 percent increase on the business as usual scenario,” LV said.
“After considering 12 tenders, we unanimously concluded that the best outcome for our members, employees and all our stakeholders was the proposed transaction with Bain Capital. It was a decision we did not take lightly given our mutual heritage, “said councilor David Barral.