Morrisons bidder closes deal on grocery pension scheme

Morrisons bidder strikes deal on grocer’s pension scheme, promising it would be ‘the best funded in the UK’

One of the private equity firms Morrisons is trying to buy has struck a deal with the supermarket’s retirement plan.

Clayton Dubilier & Rice has said it would ensure that the pension pot would rank among ‘the best funded and best supported in the UK’.

It has pledged to pledge further properties as collateral for the plan if it wins the Morrisons bidding war and to support plans for a member buyout within a decade.

Retirement Commitment: Private equity firm Clayton Dubilier & Rice has said it would ensure Morrisons’ pension pool would rank among ‘the best funded and best supported in the UK’.

The Morrisons settlement is in surplus, but trustees had expressed concern that a debt-fueled takeover could lead to other creditors taking precedence over assets if the company ran into trouble later on.

But Trustees Chairman Steve Southern said: “CD&R has been proactive in its engagement… and has delivered a positive outcome for all members of Morrisons’ retirement plans.”

CD&R and private equity firm Fortress are battling to buy Morrisons, in a contest likely to be settled by auction this month.

Morrisons is currently in favor of a £7bn bid from CD&R, after Fortress and a consortium bid £6.7bn. However, it can still be trumped in the auction.

The Morrisons retirement savings plan and the Safeway pension plan provide the retirement savings for approximately 85,500 current and former employees.

Both are well-funded and have a surplus of nearly £700 million. The trustees hope that the pension schemes will run out of a ‘buy-out’ shortfall within ten years.

However, pension consultant John Ralfe said CD&R should pay “a big dollop of cash” rather than provide property guarantees, adding: “Trustees should demand this.”