ルースサンダーランド: I've never seen a deal as bad as the LV takeover

ルースサンダーランド: In thirty years of financial journalism, I’ve never seen a deal as bad as the LV takeover

  • LV is the target of a £530million bid from U.S. private equity firm Bain Capital
  • By end of this week its fate will have been decided by a poll of its policyholders
  • Members offered the derisory sum of £100 apiece to surrender their ownership
  • Private equity has devoured UK firms worth tens of billions virtually unchecked
  • Until recently LV, the insurance firm once known as Liverpool Victoria, was chugging along in the backwaters of UK finance, viewed with deep affection if little excitement.

    今, the 178-year-old mutual is at the centre of an acrimonious battle in which its future is at stake — and much more besides.

    By the end of this week the fate of the business — the target of a £530 million bid from U.S. private equity firm Bain Capital — will have been decided by a poll of its 1.2 million policyholders.

    投票: By the end of this week ,the fate of 178-year-old mutual insurer LV, which is the target of a £530m bid from U.S. private equity firm Bain Capital, will have been decided

    投票: By the end of this week ,the fate of 178-year-old mutual insurer LV, which is the target of a £530m bid from U.S. private equity firm Bain Capital, will have been decided

    This is an important moment for savers, who entrusted their money to LV on the basis it was a mutual owned by the members, not a mere plaything for profit-hungry buyout barons.

    Members have until 2pm today to vote online or by post and can also vote in person at an online meeting on Friday, 12月 10.

    当然, the takeover is a huge concern to members, some of whom have substantial savings built up over years. Many have contacted the Mail to protest about the deal, which has also attracted criticism from prominent politicians and financial experts.

    But the repercussions go much further. We should all be concerned about the upshot, whether or not we have savings with LV.

    The vote will be a watershed. Not only for the once-proud, now greatly depleted UK mutual sector, but also for private equity, which has devoured British businesses worth tens of billions of pounds almost unchecked.

    Those that have fallen to private equity include supermarket group Morrisons and defence company Cobham.

    Even by the standards of private equity takeovers, which include disasters such as Debenhams and collapsed care-home chain Southern Cross, the LV situation is shocking.

    In three decades of financial journalism, I have covered many bids and deals. Yet I cannot recall another as confused and unconvincing.

    一度だけ, most of the blame does not lie with the private-equity panjandrums. 結局, Bain is just plying its trade.

    The true culprits are LV’s chairman Alan Cook and chief executive Mark Hartigan, whose laughable performance makes them look like the Laurel and Hardy of mutual insurance.

    The duo ought to have respect for the members who pay their large salaries. But both have, in City lingo, ‘skin in the game’ — a personal stake in Bain’s success.

    Cook has been hoping to carry on as chairman on a £205,000-a-year salary, and Hartigan aspires to stay as chief executive with an equity stake that could be much more lucrative than his current £1.2 million annual package.

    Yet they are asking their members to surrender their ownership of the business for the derisory sum of £100 apiece. 公平に, the possibility of future rises in policy values is also being dangled, though this is not guaranteed.

    Unhappy savers may feel it is worth passing up that paltry £100 to thwart Cook and Hartigan, who appear desperate to steamroller through their dubious deal.

    They have even gone to the lengths of gerrymandering the poll by trying to ditch a key voting hurdle designed to protect members’ interests.

    Their constant refrain is that Bain is offering the best option for policyholders and staff. 本当, the buyout firm has said it will not load LV with debt and that it will keep the brand.

    Vested interest: LV boss Mark Hartigan (写真) aspires to stay as chief executive with an equity stake that could be much more lucrative than his current £1.2m annual package

    Vested interest: LV boss Mark Hartigan (写真) aspires to stay as chief executive with an equity stake that could be much more lucrative than his current £1.2m annual package

    It also claims it will be best for jobs and provide new investment, though the money earmarked to go into the business for future growth comes from the insurer’s own coffers.

    And previous private equity deals have shown pledges on jobs are often not worth the paper they are written on. According to Cook and Hartigan, LV lacks the financial firepower to survive on its own — interesting, as until very recently they were insisting it had good prospects as an independent mutual.

    But they have still failed to produce a convincing explanation of their decision to turn down the chance to team up with a fellow mutual, Royal London.

    Many aspects of the Bain deal fly in the face of mutual principles, including ownership through a Jersey tax-haven company and the short-termism of the private equity business model.

    City regulators, who should have been watching this like hawks, have not seen fit to intervene.

    権利によって, しかしながら, there should be a full investigation into the shambolic conduct of the proposed sale and into whether members are being short-changed.

    とはいえ, there is probably no perfect outcome for LV savers.

    It is not clear what will happen if the Bain deal is voted down, but Royal London has signalled it may field a fresh proposal. Hartigan and Cook would almost certainly be turfed out and the regulators should ensure credible figures replace them.

    Not all private equity is bad — it can be a success, as in the case of Worldpay, a high-tech offshoot of Royal Bank of Scotland. Nor are all mutuals wonderful. Equitable Life and the Co-operative Bank both famously fell into financial difficulty and disrepute owing to poor leadership.

    しかしながら, if LV falls to Bain, it will be a body blow to what is left of a mutual sector that is still a valuable part of consumer choice.

    Former mutuals such as Halifax, Bradford & Bingley and Alliance & Leicester succumbed to greed two decades ago when they floated on the stock market. All were wiped out in the financial crisis.

    It will be a tragedy if the loss of LV gives carte blanche to private equity predators to hunt down the remaining big mutuals.

    T he LV deal should be a turning point in the invasion of private equity, which has been gobbling up many of our best-known firms. Well-known names such as Marks & Spencer are seen as targets.

    It should also help check avaricious company chief executives who stand to make millions by selling out, and the supine boards who give them the nod.

    Bosses have every incentive to roll over when private equity comes calling, as they are often in line for large payouts on options, or a chunky share stake from the new owners.

    ほとんどの場合, customers have no say. Deals are decided by big City institutions, which have little regard for mutuality, jobs or the national interest.

    LV is different. The bosses may have been relying on apathy to get their way, but the savers do have a voice. I hope each considers the bid carefully, then uses their vote.

    For if they dismiss this rotten deal, it will be a defeat for high-handed bosses and a victory for small-saver democracy.

    Make your voice heard on LV

    約 1.2 million LV members with life insurance, pension policies and annuities can vote on the proposed sale to Bain.

    Those with other types of insurance, such as car and home cover, do not get a vote as their policies have been sold to Allianz.

    Eligible customers should have received a pack by post, containing two unique security codes needed to vote online.

    There are two votes. The first is on whether members want the sale to go ahead. For this to happen, LV needs at least 75 pc of voters to approve it. If the motion fails, LV will have to consider other offers.

    The second is on whether to scrap the mutual’s current rule that at least 50 pc of all eligible members take part in the first vote.

    If LV loses this vote but wins the first, it will push ahead with the deal and members will be paid just £60 rather than £100. Members who have held an LV policy for less than 12 months will only be able to take part in the second vote.

    Votes can be cast at two online meetings on December 10 (lv.com/members/ meetings). If you cannot attend you must vote online via this link by 2pm today.

    If you have not had a voting pack but think you are eligible, call LV on 0800 066 5373 for a code to join the meeting. Results will be published on the LV website on Friday.

    You could use the wording from the letter printed in the Daily Mail newspaper’s City pages (ここに描かれています).

    We have included the words for you to copy and paste into a letter below.

    Send it to Alan Cook, Chairman of LV=, Liverpool Victoria, County Gates, Bournemouth, BH1 2NF

    Dear Alan Cook,

    私, the undersigned, urge you to reconsider your decision to sell LV= to Bain Capital and instead maintain its mutual status.

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