Melrose Industries (LON:MRO) has hit back at GKN (LON:GKN) after the FTSE 100 group yesterday pointed to its pension scheme as part of its defence against the turnaround specialist’s hostile takeover offer. Melrose recently turned to the blue-chip company’s shareholders following a rejection by GKN’s board earlier this year.
GKN’s share price has fallen into the red in today’s session, having given up 0.81 percent to 428.40p as of 08:38 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.34 percent lower at 7,645.40 points. Melrose’s share price meanwhile is 0.70 percent worse off at 228.40p.
Melrose hits back
Melrose said in a regulatory filing yesterday that it had noted GKN’s clarification in relation to its pension scheme, pointing out that the FTSE 100 group's statement “contained nothing that should cause concern to GKN pensioners”. The comments came as GKN warned yesterday that the takeover could exacerbate its pension deficit.
Melrose meanwhile pointed out that it was surprised that GKN’s clarification made no mention of an offer by the suitor “of a substantial, voluntary cash contribution of up to £150 million to the GKN pension schemes made to the Board of GKN in its letter on 8 January 2018”.
Pension expert weighs in
The Telegraph quoted pensions expert Martin Hunter, of Punter Southall Transaction Services, as commenting yesterday that a weakening of the scheme could also attract the attention of The Pensions Regulator, which could force Melrose to put more cash into the scheme when the deal completes.
The 100 company’s pension trustees recently warned that GKN’s pensions deficit was as high as £1.1 billion. GKN’s pension schemes have around 32,000 members, of which more than 17,000 are already pensioners.