Morrisons pension trustees turn up heat in bidding war

By Rod Addy contact

- Last updated on GMT

Morrisons is embroiled in a bidding war
Morrisons is embroiled in a bidding war

Related tags: Finance

Morrisons's pension scheme trustees have intensified the bidding war for the UK supermarket chain by highlighting £800m needed to support employee pensions in addition to the terms of any current offer.

Even the highest offer for the UK's fourth largest supermarket business - £7bn from Clayton Dubilier & Rice (CD&R) - would not provide the pension security it would ideally need, the trustees said.

The statement piles the pressure on both current bidders to tailor their offers to allay the fears raised by the Trustees of The Morrisons Retirement Saver Plan and The Safeway Pension Scheme. They called for the rival bidders US private equity groups Fortress and CD&R to address these concerns before an offer was agreed by shareholders.

CD&R response 25 August

However, CD&R issued a response today (25 August) that underlined its commitment to 'provide additional security to the schemes through an appropriate mitigation package'. It said it had held positive preliminary discussions with the trustees and added: "CD&R believes that it had a positive discussion with the trustees and the dialogue is now progressing."

Steve Southern, chair of trustees for the Morrison's Retirement Saver Plan and the Safeway Pension Scheme said in the trustees statement, which was released on 24 August: "An offer for Morrisons structured along the lines of the current offers would, if successful, materially weaken the existing sponsor covenant supporting the pension schemes, unless appropriate additional support for the schemes is provided.

'We hope agreement can be reached'

"We hope agreement can be reached as soon as possible on an additional security package that provides protection for members' benefits."

The statement added: "An estimate of the aggregate Section 75 deficit of the schemes as at 31 May 2021 was c.£800m. The figures have been provided to the trustees by Mercer as scheme actuary to the Morrisons Retirement Saver Plan and Aon as scheme actuary to the Safeway Pension Scheme.

"The figures are based on approximate funding updates and are not as accurate as those that would arise from full actuarial valuations."

The board of Morrisons backed a £7bn equity bid for the company, not including debt payment put forward by CD&R on 19 August. That followed a £6.7bn offer from Fortress Investment Group extended on 6 August, which the board had previously supported.

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