Morrisons bidder reaches agreement with pension trustees

·2-min read
Morrisons bidder reaches agreement with pension trustees in private equity buyout
Morrisons took another step towards being taken over by private equity on Tuesday. Photo: PA

Morrisons (MRW.L) bidders edged closer to completing the supermarket buyout on Tuesday as an agreement was reached on pension provisions. 

Trustees had been worried about the effect private equity firm Clayton, Dubilier & Rice (CD&R)'s takeover would have on employee pensions as it closed in on a £7bn ($9.7bn) bid last month

But CD&R has now agreed to additional security to be added to the existing pension funding partnership structure in the form of further properties. 

It also agreed to appropriate top up and release mechanisms of the additional security to ensure the schemes progress on their established journey towards "buy out."

Under the deal there will be enhanced governance provisions for the schemes and information sharing arrangements with the trustees to ensure full awareness and alignment among stakeholders.

As private equity firms have raced to buy up British businesses there have been worries across the board about job security and the question of whether firms will strip companies for their assets to make a cheap buck. Pensions were also a factor in this. 

The agreement with CD&R is a step toward quelling those fears. 

Read more: Who are CD&R, the money men behind Morrisons' bid?

"We are pleased with the progress made and CD&R's ability to provide the necessary support and reassurance to the schemes," said Steve Southern, chairman of the trustees.

"CD&R has been proactive in its engagement with the trustees, with discussions progressing positively and decisively, delivering a positive outcome for all members of Morrisons' pension schemes."

Sir Terry Leahy, senior adviser to CD&R funds, said the firm was “delighted” to have reached an agreement.

Watch: Morrisons warns of price rises and shortages as half-year profits fall 43%

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