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Retail

CD&R Pledges To Protect Morrisons Pension Rights After Takeover

Private equity group Clayton, Dubilier & Rice (CD&R) said the pension rights of the Morrisons management team and employees will be 'fully safeguarded' once its takeover offer for the British supermarket chain becomes effective.

CD&R said it does not intend to make any change to the benefits, after trustees of the retailer's two pension schemes expressed concern that a takeover by either suitor could 'materially weaken' the security of the schemes.

The trustees of the retailer's two pension schemes said that whilst the plans were currently in surplus, they remained dependent on the backing of Morrisons.

They said that support could be weakened by a private equity buyer, for example by a new owner securing additional debt on the supermarket's assets, the related increased debt service burden and possible refinancing and restructuring.

'Materially Weaken The Existing Sponsor Covenant'

Trustees chair Steve Southern said, "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 as soon as possible on an additional security package that provides protection for members' benefits."

The retailer said it placed significant emphasis on the responsibilities of an owner, including towards its pensions. It said it would work with all parties to reach an agreement as soon as possible.

Last week, Morrisons backed an offer from CD&R, although its shares jumped above the 285-pence-a-share bid, indicating the battle could carry on.

Elsewhere, Morrisons shareholder Legal & General said it believed the true value of the supermarket chain should be realised following the sweetened bid from private equity group CD&R, with more attention now being paid to its property assets.

News by Reuters, edited by ESM. For more Retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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