Royal London confirmed on Friday afternoon it has offered to enter into “immediate and exclusive discussions” with mutual life insurer LV= — formerly known as Liverpool Victoria — to agree a “mutual merger.”
Royal London is the UK’s largest mutual life, pensions and investment company. It employs more than 1,000 in Scotland and includes the former Scottish Life and Scottish Provident businesses.
Earlier on Friday, LV= abandoned a proposed £530 million takeover by private equity firm Bain Capital after it lost a member vote.
LV= said 69% of members who voted supported the acquisition by Bain Capital at a Special General Meeting but the result fell below the required 75% threshold.
Voter turnout of 174,240 represented 15% of LV=’s 1.16 million members.
The Bain deal had faced opposition from members who said they were not being sufficiently compensated for the loss of the insurer’s mutual status.
“In light of the outcome of LV=’s Special General Meeting, Royal London can confirm that it has offered to enter into immediate and exclusive discussions with LV= to agree a mutual merger that will offer LV= customers the opportunity to have their life savings protected and invested by a mutual,” said Royal London.
“We envisage that the terms of the merger would offer LV= members the option to become members of Royal London.
“This proposal has been made on a different basis to the previous offer made in 2020.
“If the merger goes ahead, the bringing together of the best of both companies will result in a growing, well-capitalised, modern mutual.
“It will provide UK consumers with a great customer-owned alternative to the rest of the insurance and long-term savings market, which is almost universally shareholder-owned.
“We are confident that there will be exciting opportunities for colleagues within both Royal London and LV= as part of a larger, well-capitalised and growing mutual.
“We hope to agree a proposal that Royal London can recommend to our members.
“If we proceed, we will consult widely and provide clear information to members of both organisations about what this merger might mean for them.
“In the meantime, it is important to note that these discussions have no impact on our day-to-day business.
“Customers don’t need to take any action at this stage and they will continue to receive the same high standard of customer service that they expect.
“There is no certainty that these discussions will result in a transaction and a further announcement will be made as and when appropriate.”
LV= said: “LV= can confirm it has received an unsolicited preliminary merger proposal from Royal London on December 8th 2021.
“The proposal, which is on a substantively different structure to the offer received during the process in 2020, now includes the possibility of continued mutuality and is conditional on exclusive discussions.
“The outline proposal from Royal London is at an early stage and is subject to discussion, due diligence and detailed negotiation of financial and other terms.
“There can be no certainty that a transaction will be agreed.
“The board will consider this proposal seriously and undertakes to update members as soon as practicable.
“In evaluating the Royal London proposal, the board will continue to have regard to members and stakeholders best interests.”