Ge Capital, the financial services arm of General Electric of the US, was last night working up a fresh counterbid for Equitable Life, despite the life insurance mutual’s insistence that the £1bn rescue unveiled by Halifax yesterday was a “done deal” that could not be unpicked. Ge Capital, the financial services arm of General Electric of the US, was last night working up a fresh counterbid for Equitable Life, despite the life insurance mutual’s insistence that the £1bn rescue unveiled by Halifax yesterday was a “done deal” that could not be unpicked.
GE, whose last-ditch approach was snubbed by Equitable at the weekend, is expected to contest Equitable’s view that the sale of its operations to Halifax could legally be agreed by management without requiring a full membership vote.However, GE’s offer would have to be much better than Halifax’s in order to make a case that the board had a fiduciary duty to policyholders to reopen the auction at this stage.Unveiling yesterday’s two-stage deal, James Crosby, Halifax chief executive, said it offered certainty and low-cost administration for Equitable policyholders, and was also a good financial deal for Halifax shareholders.Equitable had been seeking a buyer since the House of Lords ruled last July that it was wrong to cut final bonuses to pensioners who exercised options in their policies guaranteeing annuities irrespective of market rates. The crisis deepened in December after Prudential pulled out of takeover talks, forcing Britain’s oldest life insurance mutual to close to new business.However, fresh life was injected into the sales process by attempts to broker a deal with guaranteed annuity holders. The proposal would mean that they agree to surrender any further claims on the Equitable Life with-profits fund beyond the £1.5bn already provisioned, in return for a one-off 20 per cent boost to their policies.Under stage one of the Halifax deal, the high-street bank is offering an immediate £500m cash boost to the Equitable life fund. Stage two, which will mean a further £500m over three years, is dependent on a settlement being been struck with guaranteed annuity holders. If that is achieved, £250m of the second £500m will be paid over to Equitable’s life fund immediately.

The remaining £250m will be paid out subject to the Equitable sales force meeting certain agreed targets in 2003 and 2004.However, Equitable Life policyholders attacked the deal, accusing Equitable’s chief executive, Chris Headdon, of agreeing to a “fire sale” to avoid being grilled when he goes before the Treasury Select Committee next week.Mr Headdon hailed the Halifax deal as “a good outcome from what has obviously been a difficult period for the society”. He said he saw little point in meeting GE as, unlike GE, Halifax “is offering real money which goes straight to the life fund”. Equitable Life said it would have preferred to put the sale to policyholders, but Halifax had insisted the deal not be put to the membership, since that would have meant further delay.Although Stuart Bayliss, guaranteed annuity (GAR) holders’ representative, welcomed the Halifax deal, the Equitable Members Action Group (EMAG) and Equitable Life Members Help Group, the two unaffiliated non-GAR policyholders’ groups, said the Halifax deal should be put on hold to allow proper time for GE Capital’s offer to be considered.Paul Braithwaite, EMAG’s deputy chairman, said: “Both of these proposals involve parting with control of the core business – the management of the £30bn with-profits fund, which is the very essence of the society. As such, the action groups argue, any such proposed sale must be put to the membership for ratification.”Defending his decision to accept the Halifax terms, Mr Headdon insisted the cash injection would enable Equitable Life to ditch the more conservative investment policy it introduced in December after it took the £1.5bn hit. He also pointed out that, while Halifax would provide IT and administration services at cost, GE was offering to provide these and the £800m support to the Equitable Life fund at “commercial rates”. This would cost policyholders more in the long term.Under the Halifax deal, the Equitable with-profits fund will be run as a closed fund. The assets will be managed by Clerical Medical, owned by Halifax.Mr Crosby said the deal would be immediately earnings-enhancing.

Halifax estimates that about £60m of the profits increase will come from higher sales, with a further £70m a year coming from cost savings.Halifax will switch administration of its existing life business to Equitable operations in Aylesbury, Buckinghamshire This is now outsourced to CGNU. The 400-strong sales force, inactive since Equitable closed to new business in December, will start selling new products under the Halifax Equitable banner.Mr Crosby said he hoped most policyholders would opt to stay under the new arrangement. But for those who wanted to move, Halifax would offer a unit-linked product with no initial charge and no exit fee. The 10 per cent surrender charge Equitable imposed to stop mass defections will remain.. Bertelsmann, the secretive German media group, cleared the way for a partial stock market flotation yesterday with a share swap deal that sees it take control of RTL, Europe’s largest television group. Bertelsmann, the secretive German media group, cleared the way for a partial stock market flotation yesterday with a share swap deal that sees it take control of RTL, Europe’s largest television group.
Bertelsmann is acquiring the 30 per cent stake in RTL held by Group Bruxelles Lambert (GBL), the Brussels-based financial holding company controlled by Albért Frere.The deal takes Bertelsmann’s stake in RTL to 67 per cent.

In return, the Belgian group will receive a 25.1 per cent stake in Bertelsmann, which it can float on the Frankfurt stock exchange in three to four years.The deal represents a watershed in the long history of Bertelsmann, whose interests include the BMG music label with artists such as Britney Spears, Carlos Santana and Westlife, the Random House publishing empire and the Gruner & Jahr magazine group.A privately controlled company since its formation in Germany in 1865, Bertelsmann will be able to access capital markets to help fund an even more active role in the consolidation of the global media industry. The company is already pursuing a merger of its music interests with those of EMI.The founding Mohn family will still control the other 75 per cent of Bertelsmann. But the company’s chief executive, Thomas Middelhoff, said the deal broke the “dogma” of the group’s aversion to being publicly quoted.”From both a strategic and historic point of view this is a significant step that will lastingly shape the company’s future,” he said. “We have shown that we could do the RTL deal without being listed but the initial public offering will give our company more flexibility.”Analysts said the deal made sense. Nicola Stewart, analyst at Commerzbank, commented: “The flotation is not a big surprise. The company has been preparing for a listing and we had expected the German media industry to liberalise because most of these companies are still family owned.”RTL Group was created last April by the combination of Bertelsmann’s CLT-UFA broadcasting interests with GBL’s Audiofina unit and Pearson’s television arm.

It owns 22 television stations, including most of Channel 5, and 18 radio stations across Europe. Its programmes include Baywatch, The Bill and Neighbours.Bertelsmann said it aimed to raise RTL’s free float from 10.3 per cent to 15 per cent, a move which would qualify the company for inclusion in the FTSE 100 index of leading stocks.Pearson’s stake in RTL will remain 22 per cent. The company denied the Bertelsmann deal was a prelude to Pearson reducing its television interests. “It simplifies the share structure but apart from that I don’t think it changes very much from our point of view,” said John Makinson, Pearson’s finance director.RTL has a market value of around 14bn euros (£8.9bn).