On the go: The trustees of Morrisons’ defined benefit schemes are in talks with representatives of Fortress Investment Group, which has made an offer to takeover the British retailer.
The investment management company announced a £6.3bn offer to buy Morrisons on July 3, which has now been unanimously recommended by the retailer’s directors.
Morrisons sponsors three DB schemes — the Morrisons Retirement Plan, the Safeway Pension Scheme, and the Retirement Saver Plan — which had surpluses of £518m, £157m and £7m respectively, according to the pension funds’ 2019 actuarial valuations.
As a result of these funding positions there are currently no deficit contributions payable.
Fortress, which has been engaging with the schemes’ trustees since it made the offer, stated that it “appreciates the importance of the scheme as key stakeholders in the business”.
In the event the offer is successful, the investment company “recognises the need to maintain the strong support currently provided to the schemes and that this requires mitigation to be agreed”, a statement read.
“Discussions are continuing with the trustees to agree appropriate mitigation, and the trustees have stated their intention to issue their opinion on the fortress offer in due course,” it added.
Fortress has stated it does not intend to reopen any of the UK pension schemes to new members or future accrual, and has assured that existing contractual and statutory employment rights will be fully safeguarded.
These assurances come after rising concerns from ministers that the takeover could load Morrisons with debt and reduce pension contributions.
Earlier in July, Darren Jones, chair of the Business, Energy and Industrial Strategy Committee, said in a letter to the Competition and Markets Authority: “British supermarkets are the latest area of interest for private equity and other buyers using significant amounts of debt.
“Some stakeholders have raised concerns about what this might mean for the protection of jobs, pension funds and supermarkets’ presence on British high streets.”
Fortress Investment Group has experience in investing in the UK, specifically in the retail and food space through its investment in Majestic Wine.
According to media reports, if the deal goes through, the Morrisons bid would be the biggest private equity deal since the takeover of Boots in 2007, which was valued at £11bn.
