GKN, fighting off Melrose, says pensions safe under its plan
LONDON (Reuters) - British engineering company GKN (GKN.L), fighting off a hostile takeover bid from Melrose (MRON.L), said on Tuesday it had a plan in place to protect its pension scheme as the two sides locked horns over the latest issue to emerge.
FILE PHOTO: Branding is seen outside the headquarters of GKN in Redditch, Britain, March 12, 2018. REUTERS/Hannah McKay/File Photo
Melrose had on Monday said it would inject about 1 billion pounds ($1.4 billion) into GKN’s pension scheme in its latest attempt to convince shareholders to back its 7.8 billion pound bid and win over political opponents of the deal.
Shareholders have until March 29 to choose whether to accept Melrose’s offer or back GKN’s management, which wants to split off the group’s auto unit and combine it with U.S.-based Dana Incorporated, and concentrate on its aerospace division.
GKN on Tuesday sought to highlight the merits of its plan for pensioners, calling comments made by Melrose on Monday “misleading”, as part of an ongoing war of words between the pair.
“GKN has a clear and comprehensive plan to reduce its pension liabilities and eliminate the deficit in its UK pension schemes,” GKN’s finance director Jos Sclater said in a statement on Tuesday.
“We have a binding agreement with the Trustees which works for all stakeholders: the scheme members, the Trustees and the company and its shareholders.”
The fate of deficit-ridden pension schemes during changes of ownership have been in focus in Britain after department store chain BHS collapsed in 2016.
Some lawmakers have voiced concern that the GKN scheme would be weakened by the Melrose’s bid, prompting Melrose to make the 1 billion pound pledge over its ownership period, a huge increase on its previous plan to add 150 million pounds.