Norwich Union faces revolt over 'diabolical' deal

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The Independent Online

A 62-year-old accountant turned consultant named Michael Braham is mounting an 11th-hour bid to halt the £18bn merger between CGU and Norwich Union insurance groups.

Mr Braham, who holds 4,000 Norwich Union shares, says the board has been "hoodwinked" into accepting a raw deal, and he is calling on the 1.1 million individual shareholders who make up 42 per cent of Norwich Union's capital base to vote against the deal next week.

He said: "In my view this is a diabolical deal for Norwich Union shareholders."

He says he is angry that while Norwich Union is contributing 54 per cent of the combined profits, Norwich Union shareholders will only receive 41.5 per cent of the new group.

The move came as Richard Harvey, Norwich Union's chief executive, raised the spectre of Longbridge and appealed to the patriotism of individual shareholders to vote the deal through, warning that without a British insurance champion, control of the industry was pass into foreign hands.

Referring to the plight of Rover car workers who face mass redundancy following BMW's decision to walk way from the business, he said: "We don't want another Longbridge on our hands," he said. Up to 4,000 UK jobs could go if the merger goes through. The axe will full particularly heavily in Norwich where the company is one of the largest employers.

Mr Harvey will become deputy chief executive of the combined CGNU group and will take over from as chief executive from Bob Scott of CGU when he retires next year.

Mr Braham said: "It is purely a defensive move concocted by two frightened insurers who are terrified of being taken over by powerful foreigners."

Mr Braham admits he has not left himself much time to foment a revolt. The deal needs to be approved by a 75 per cent majority of votes cast at special meeting of Norwich Union shareholders at the Wembley Conference Centre next week. To vote by proxy, voting forms have to be in by next Wednesday.

A number of rival insurance groups have looked at counterbidding, in the wake of the disappointing stock market reaction to the deal. However, after an initial hiccup, a joint roadshow by Mr Harvey and Mr Scott appears to have won round institutional shareholders.

Mr Braham insists that his own motives are not mercenary. "I have £16,000 worth of shares. An extra £100 or so is not going to make much difference.

"I just felt that sometimes in life when you look at something that it is not right you have to do something."

He has little faith in institutions, which he believes are part of the City club. "The ordinary shareholder being confronted with a 100-page circular is, in 99 cases out of 100, going to bin it and do nothing," he added.

A Norwich Union spokesman said: "The company has spent a massive amount of time explaining the reasons for the merger and why it is in the interests of shareholders; we are not going to be drawn by Mr Braham."