Royal London rumoured to be in negotiations for LV= tie-up

Royal London and LV= are reportedly in detailed negotiations about a tie-up that would create a “mutual champion” with nearly 10 million customers, according to a report from Sky News .

According to the report, the LV= board is understood to have met this week to discuss the progress of a strategic review undertaken in July, with a decision about the Royal London potentially expected “within days”.

However, it clarified that the two parties are not in exclusive discussions, with others, such as Bain Capital, also reportedly keen on acquiring LV=.

The transaction would bring together the pensions, life insurance and asset management business of the two firms, with a combined workforce of almost 6,000 people.

Whilst the valuation of LV= is not known, Sky News reported that sources close to LV= stated that it would be in excess of £500m but “substantially less” than £1bn.

It also stipulated that Royal London is expected to finance the purchase using the proceeds of a £600m debt-raising it undertook last year.

The report noted that LV=’s 1.1 million members would be expected to to vote on any transaction recommended by the board, and that a deal would not close until next year.

Furthermore, it cited a source close to the deal who insisted that the firm could still decide against endorsing a deal which led to the loss of its independence and instead seek a joint venture or another form of partnership.

This follows the end of LV=’s friendly society status at the beginning of the year, which the firm stated would allow its board to act more effectively on behalf of its members.

Commenting on press speculation of a potential transaction in relation to the business in June, LV= emphasised that it is "fully committed to maximizing long-term value for members", and was assessing a “wide range of strategic options” following the disposal of the general insurance business.

It stated: "Some but not all of these options may involve a transaction with a third party.

"No conclusions have yet been reached as to the most appropriate option to pursue and there can be no certainty that this review will result in any transaction being agreed or with whom."

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