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Royal London in takeover talks with LV

Royal London in takeover talks with LV

Royal London is in talks to take over LV to create a large-scale mutual, according to reports.

Sky News reported over the weekend that talks on a takeover of LV by Royal London are at a late stage and would result in a merger of the pensions, life insurance and asset management businesses with more than 10m customers.

Sources have said the new company would be valued at more than £500m and that Royal London would finance the deal using the proceeds of a £600m debt raise it took part in last year.

While LV has not confirmed it is specifically in talks with Royal London, it has said it is in merger talks with a number of companies.

In a statement on the stock exchange this morning (September 28), it confirmed that as part of a previously announced strategic review it is in discussions with a number of parties regarding a potential transaction.

 “Discussions are on-going and there can be no certainty that the discussions will result in any transaction being agreed or with whom," it stated.

“LV= continues to trade well having adapted effectively to the impact of Covid-19 with a strong capital coverage ratio in excess of 200 per cent."

It said a further announcement would be made when appropriate.

Sky News reported that LV’s board had met last week to discuss the progress of its strategic review, with a decision about a deal with Royal London potentially being reached within days.

Back in June, it was reported that LV had sought advice as to whether the sale of its life and pensions business would be in the best interest of it 1.3m customers.

It also said it was looking into a joint venture option, similar to the one it struck with German insurance giant Allianz when it sold its general insurance business in 2017.

It is understood that corporate finance advisory Fenchurch Advisory Partners, which also advised Royal London on the sale of its Ascentric platform, is advising LV on its options.

Back in March 2017, LV was forced to deny it had been involved in discussions to merge with Royal London after reports of talks emerged.

At the time LV said it was not in merger talks with any business and that it was a “perpetual story that rears its head every few years”.

If the deal goes ahead, it will be the latest acquisition for Royal London which sold its Ascentric platform to M&G back in May in a move which saw £14bn of assets under administration move to the asset manager.

amy.austin@ft.com

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