🚫Members vote no to insurer LV £530m takeover

INSURANCE
Members vote no to insurer LV £530m takeover

What’s going on?
Members of LV have rejected the proposal to sell the insurer to US private equity firm Bain Capital, leaving its future up in the air.

Why is this important?

LV, previously known as Liverpool Victoria, has been owned by its member-customers since being founded 178 years ago. This structure is called a mutual. Last year the insurer received a £530m offer from Bain that would see it lose its mutual status.

This provoked a backlash as the 1.2m members would each only get about £100 while the investment banks advising LV would get millions, one of whom is the Conservative Party treasurer. 

At the all-important vote on Friday 69% of members approved the takeover, just shy of the 75% needed. Given how relatively high profile the deal had been - the Daily Mail and some MPs campaigned against it -  it was perhaps surprising that only 15% of members actually voted.

Takeaway
So what now for LV? The board and management had argued that the business had little future as a stand-alone company, being too small to compete with better funded peers.

Last month fellow mutual insurer, Royal London, stepped in with a counteroffer of £540m which LV believed was a way to torpedo the Bain deal.

But given that a merger with Royal would keep the mutual status, that might be an easier pitch to members than selling out to a US private equity firm.

TELECOMS
Could BT be next in line for a buyout?

In June French billionaire Patrick Drahi, bought a 12% stake in BT worth £2bn, becoming the telecom company’s largest shareholder. Under UK rules Drahi was not allowed to buy anymore of BT for six months. At the time he ruled out a full-blown takeover, but with the restriction expired on Saturday all bets are off.

What’s behind the move? Drahi said he believes BT has a compelling opportunity to deliver the expansion full-fibre broadband throughout the UK. Earlier this year BT announced plans to invest billions in getting full-fibre broadband connections to 20 million homes by 2026.

Who is Patrick Drahi? He’s quite the globetrotter holding French, Moroccan, Portuguese and Israeli citizenship and now lives in Switzerland. He founded French media and telecoms giant Altice over 20 years ago and has made investments in telecoms businesses in the US, Portugal and Israel. He has a keen interest in art, owning works by Picasso, Matisse as well as the auction house Sotheby’s. Forbes estimates his net worth at over $12bn.

What’s next? The past year has seen a number of high-profile British companies fall into foreign ownership in the face of heavy opposition. Taking over a former-state owned phone company would be a bold and challenging move.

From next month, the government will gain new powers to block the takeover of key national assets like BT. If Drahi makes a move, it would undoubtedly be investigated by regulators and face government scrutiny.