PENSIONS giant Royal London, which is a big employer in Scotland, has said merger talks with fellow mutual LV= have ended as it cast doubt on the firm’s chances of survival as an independent.
Royal London confirmed on Monday that it had started talks about a merger that it has said would offer an attractive future for the members of the business formerly known as Liverpool Victoria as part of a growing and well-capitalised mutual.
It said yesterday that discussions with LV= on the potential for a mutual merger have ceased.
“Our offer to preserve LV=‘s mutuality through a merger with Royal London was based on an understanding that LV= did not have a viable future as an independent company,” said chief executive Barry O’Dwyer. “For Royal London’s customers and members, nothing changes.”
However, LV=’s acting chair designate Seamus Creedon insisted the firm had a bright future and members had shown their attachment to its brand.
He said: “We thank Royal London for its engagement and we look forward to operating alongside it as part of a vibrant mutual sector.
“The strength of LV=’s business performance over the past 18 months combined with its operational progress has strengthened the Board’s belief in, and commitment to, the continuation of our status as an independent mutual.”
READ MORE: Jobs in focus as former Liverpool Victoria faces takeover
The talks with Royal London started after members of LV= rejected a £530 million takeover proposal from Bain Capital in December. The bid had been recommended by LV=’s board. It would have resulted in LV= giving up its mutual status. The 1.2 million LV= policy holders concerned were in line to receive £100 each if the proposal was accepted.
LV= directors decided the Bain offer was more attractive than a bid that Royal London made for the firm in 2020 and proposals made by others.
LV= said on Monday that Mr Creedon would take over from Alan Cook as interim chair in April. While chief executive Mark Hartigan has faced calls for his resignation, Mr Creedon said he had been doing an excellent job.
Royal London has around 1,400 employees in Scotland. It acquired the Edinburgh-based Scottish Life and Scottish Provident businesses in 2000 and 2008 respectively.
Mutuals claim they can deliver greater benefits for the customers that own them than shareholder-owned firms driven by short term earnings targets.
READ MORE: Glasgow mutual wins vote of confidence from financial services heavyweight
However, a range of Scottish life and pensions firms have given up mutual status in recent decades.
Dutch-owned Aegon acquired Scottish Equitable in 1994. Prudential bought Scottish Amicable in 1998 while Lloyds swallowed up Scottish Widows the following year.
Standard Life policyholders voted in favour of demutualisation in 2006. The firm merged with Aberdeen Asset Management in 2017. The enlarged group sold its pensions business to Phoenix in 2018 and changed its name to abrdn last year.
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