Just 30 days to save insurer LV from US private equity predators
Fury grows over raid on historic UK insurer: Just 30 days to save LV from US private equity predators as critics warn takeover could cause job losses
- Politicians united to condemn the £530mil buyout of LV by US firm Bain Capital
- Takeover means 178-year-old insurer will no longer be owned by 1.2mil members
- In impassioned plea, Lord Heseltine urged LV members to vote against the deal
- Private equity firms spent £33bn snapping up UK firms in first half of this year
The takeover of a historic insurer by private equity predators was facing a furious backlash last night.
Politicians from all parties united to condemn the £530million buyout of LV by US firm Bain Capital. The takeover means the 178-year-old insurer – founded to help Liverpool’s poor bury their dead – will no longer be owned by its 1.2million members.
Private equity predators have become notorious for taking quick profits while slashing jobs and leaving behind long-term problems.
In an impassioned plea, Lord Heseltine urged LV members to vote against the deal next month. ‘You can vote for the original concept and remain as owners yourselves,’ said the Tory peer. Private equity firms spent an unprecedented £33billion snapping up British firms on the cheap during the pandemic in the first half of this year.
Ed Miliband, Labour’s business spokesman, also urged members to oppose the deal. ‘I am deeply concerned at the details of the proposed takeover and demutualisation of LV by Bain Capital,’ he said.
Bosses Mark Hartigan and Alan Cook (pictured above) plan to stay on if the deal goes through – other offers would have seen them lose their jobs
‘I urge members to make their voices heard during this process and protect their best interests. The Government should be doing everything it can to grow our mutual and co-operative sector.
‘Instead, it’s another example of leaving our firms dangerously exposed to takeovers that strip assets, lose jobs and weaken our national economy.’
Critics of the Bain takeover of LV have raised concerns over:
- Job losses among LV’s 1,500 staff in Bournemouth, Exeter and Hitchin;
- LV refusing to disclose details of a rival offer from fellow mutual Royal London, believed to have been £10million more;
- Bosses Mark Hartigan and Alan Cook’s repeated claims that they will not profit personally from the sale;
- A rule change that will see LV bosses try to scrap an article of their mutual constitution to make it easier to force through the sale;
- Mr Cook’s role in the Post Office scandal where he oversaw the first prosecutions of sub-postmasters who were wrongly accused of theft.
LV members can vote against the deal online before December 8 or at a special meeting on December 10. While LV bosses line up for bumper pay packets after the deal, the policyholders who own the company will get just £100 each.
LV’s board agreed the £530million deal with Bain in December last year after sounding out offers from 12 potential buyers. Bosses said the private equity firm offered an ‘unrivalled commitment’ to LV’s future. But it emerged they had planned a change in the rules to secure members’ approval, which Lord Heseltine called ‘reprehensible’.
LV members can vote against the deal online before December 8 or at a special meeting on December 10. While LV bosses line up for bumper pay packets after the deal, the policyholders who own the company will get just £100 each (file photo of company’s Bournemouth offices)
Bosses admitted they would not meet the 50 per cent voter turnout required by LV’s constitution so will put forward a second vote at the same time asking them to scrap the rule.
Mr Hartigan and Mr Cook plan to stay on if the deal goes through – other offers would have seen them lose their jobs. The former is likely to be handed an equity stake potentially worth millions and his salary would be significantly higher than the £1.2million he was paid last year.
Mr Cook has said he will receive ‘no bonuses or incentives’ as part of the deal, but he will retain his £205,000-a-year role for at least two more years.
Bain has made no guarantees about jobs, but has said it will keep a presence in all three current bases.
Gareth Thomas, who chairs parliament’s cross-party group on mutuals, urged members to block the deal. The Labour MP said: ‘If members do not get out and vote against this deal in huge numbers, we could see another historic British firm fall to private equity vultures.’
In an impassioned plea, Lord Heseltine urged LV members to vote against the deal next month. ‘You can vote for the original concept and remain as owners yourselves,’ said the Tory peer
Sarah Olney, Lib Dem business spokesman, said: ‘This potential takeover is highly concerning, both for LV itself and for what it means for British business. It’s even more worrying that the deal seems to rely on the rewriting of company rules.’
The Green Party said that LV bosses were acting like ‘carpet-baggers’.
Finance spokesman Molly Scott Cato said: ‘Whether or not they stand to gain personally, it looks as if they have a strategy of bribing current owners with their own money.’
An LV spokesman said: ‘While none of the bids would have allowed LV to remain as a standalone mutual, this deal provides the highest distribution to with-profits policyholders compared to continuing with “business as usual” or closing to new business.’
In a letter to LV members, Bain’s Matt Popoli said: ‘We are looking forward to investing in LV and its people for the long term, to preserve and grow the LV heritage into the future for the next generation of customers.’
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