Legal action could derail LV’s £530m private equity takeover even if bosses win vote

Legal challenge: LV 's controversial takeover could be derailed even if its 1.2m customers give it the green light

Legal challenge: LV’s controversial takeover may be blocked even if its 1.2m clients give the go-ahead

Today’s vote by LV members will determine the fate of the controversial takeover. But the deal could be derailed even if LV’s 1.2m customers give it the green light with opponents preparing a legal challenge.

Bosses at the 178-year-old life insurer are set on selling it to US private equity shark Bain Capital in a £530million deal. 

But the proposal has angered MPs, experts and LV’s own policyholders, who argue that a sale to Bain would see the firm sell its history and principles down the river.  LV was once called Liverpool Victoria and founded in 1843. The mutual structure of LV has been a constant feature, which means that its members own it. 

It is run solely for the benefit of its shareholders, and not for profit.

Private equity firms such as Bain, however, buy businesses to increase their profits and they are well-known for cutting jobs and raising prices.

Members are worried that LV’s service will tumble if the firm falls into Bain’s hands. LV’s customer-members have been voting on the deal for the past several weeks. Members will still be able to cast their ballot at today’s online meeting, which starts at 2pm.

But even if the required 75 per cent of voters wave the deal through, a group of disgruntled members have hired law firm Leigh Day and top barrister David Chivers QC to challenge the shoddy communications from LV’s top brass. 

The Mail has learned that representatives of Leigh Day, Chivers, and the Financial Conduct Authority met with City watchdogs to express their concerns.

Chivers is planning to shine a spotlight on the £100 payout which LV is offering to each of its members – which several have branded ‘paltry’ – to give up their ownership of the company.

Bain has admitted that it decided to pay out to all members because it hoped the lure of £100 would persuade more to vote in its favour. 

Chivers contends that LV’s chief executive Mark Hartigan, and Chairman Alan Cook were not authorized to make the payout. 

Instead, he argues, all of the money which Bain was offering to buy LV should have gone solely to the 297,000 members who own more generous ‘with-profits’ policies – giving them another £85million between them.

The policyholders should decide if they want to share the money with their fellow members.

LV has knocked back this claim, as its ‘independent expert’ – paid for by the firm – does not agree that the deal should be classified in the same way as Chivers thinks.

But if members back the deal, Chivers is planning to put his arguments in front of a judge, who must approve Bain’s takeover of LV before it can go ahead.