“This was not a request that LV's board could accept as it would have significantly weakened its negotiation position with Royal London and would have involved terminating discussions with other parties who ultimately put forward a better and more certain transaction to the benefit of LV and its members.”
As well as material due diligence outstanding, LV also highlighted how Royal London’s initial proposal “would have resulted in the rationalisation of our operations and significant headcount reductions”.
It added that no commitment was offered by Royal London with respect to its office locations in Exeter and Hitchin.
And while Royal London offered a higher headline value - £540m compared to Bain Capital’s £530m - LV said Royal London was proposing to leave material liabilities in respect of the non-profit business with LV's with-profit fund.
“Additionally, Royal London's proposal included higher and less certain administration and investment management costs,” the insurer said.
In a statement Royal London sent to FTAdviser yesterday, it confirmed it had contacted LV and asked the mutual to consider if its current proposals could be "enhanced".
It said: "We are ready to explore any option for the business that delivers a better member outcome, and we believe there are significant benefits for LV members in being part of another mutual. This could involve the business as a whole or just the with-profit members.
"The board of LV has not taken up our offer to discuss other possible options but our door is open and we remain ready to engage.”
In response Royal London said it has "long wished" to find a way to combine the UK’s two biggest insurance mutuals and that it does not want to break up LV. It also confirmed that staying mutual wasan option if LV made this a priority and engaged in talks.
Barry O’Dwyer, chief executive of Royal London, said: “LV members have an important choice to make. I call on the LV board to engage with us to explore how LV customers can continue to have their life savings protected and invested by a mutual.”
ruby.hinchliffe@ft.com
