Bain Capital Credit LP's proposed £530 million takeover of U.K. mutual life insurer Liverpool Victoria Financial Services Ltd., or LV= has fallen apart after failing to get sufficient approval from LV= members.

Some 69% of LV= members that voted were in favor of the deal, short of the 75% required.

Fellow U.K. mutual The Royal London Mutual Insurance Society Ltd., Bain's main rival to acquire LV=, said it has offered to enter "immediate and exclusive discussions" with LV= about a merger "on a different basis" from the proposal it submitted in 2020. It said its proposal would offer LV= members the option to become members of Royal London.

LV= said it will "swiftly assess its strategic options" following the Bain deal collapse and explore alternative ways to provide the best outcome for members. The company will explore whether mutuality can be retained on a stand-alone basis or with a merger. It expects to provide an update to members "as soon as it can" in 2022.

About 15% of LV='s members turned out to vote.

The deal with Bain Capital, first announced in December 2020, had faced heavy criticism in the run-up to the member vote, prompting repeated insistence from LV= that staying its current course "does not work," and that the takeover was the best of a dozen proposals it received.

LV= came under fire, among other things, for rejecting a higher bid from Royal London. While admitting in a Nov. 16 statement that Royal London had offered £540 million, LV= said that, unlike the Bain proposal, the Royal London transaction would leave "material liabilities" from the nonprofit business with the for-profit business.

It also asserted that Royal London's proposal would not have given LV= members any membership rights in the resulting enlarged mutual.