Private equity predators faced a fierce backlash against the takeover of an historic insurer.
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 are known for taking fast profits and leaving long-term problems behind.
Lord Heseltine pleaded with LV members not to support the agreement in a passionate plea. ‘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. It is important that the Government does everything possible to promote our co-operative and mutual sector.
‘Instead, it’s another example of leaving our firms dangerously exposed to takeovers that strip assets, lose jobs and weaken our national economy.’
Bain’s takeover of LV has been criticized by critics.
- 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 in which LV bosses will try to eliminate an article of their mutual Constitution to make it easier for the sale to be enforced;
- 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 have the option to vote no online or in person against this deal before December 8. 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 have the option to vote no online or in person against this deal before December 8. 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 did not make any guarantees regarding jobs but said that it would continue to be present at all three 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.’
Lord Heseltine pleaded passionately for LV members against the deal. ‘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.’