Engineering company GKN has rejected what it said are indirect claims made by unsuccessful bidder Melrose Industries that GKN's pension liability has increased due to delays in closing its main scheme to accrual.
In a statement about investment company Melrose's hostile takeover bid, GKN said it "wishes to correct some of the misleading statements made by Melrose in its announcement and investor presentation released on 15 January 2018".
In the presentation, a slide entitled "Melrose deals with pensions issues" compared the DB closure date of GKN in 2017 with the FKI UK Pension Scheme, which was closed in 2011. This was followed by figures on the GKN scheme's deficit development.
GKN said claims that its pension liability has increased due to delays in closing the main UK scheme to future accrual were inaccurate. "The increase in the total aggregate deficit is substantively due to movements in underlying discount rates," it said.
GKN said it "looks forward to continuing its close working relationship" with the trustees, "which has ensured the sustainability of the pension funds through all the pressures that they have faced over many years".
It noted that "the mutual trust between GKN and the pension trustees was crucial" in enabling last year’s overhaul of the fund, which included an injection of £250m.
Earlier this week, GKN trustees had taken the unusual step of issuing a press release warning potential buyers that it would review the employer covenant and funding plan in case of a takeover.
As of September 30 2017, the schemes had an aggregate deficit on a gilts flat basis of £1.1bn, and an aggregate deficit on a section 75 basis of £1.9bn.
The following day, Melrose said it had noted the trustees' statement, adding that the numbers are in line with Melrose's own reading.
"Melrose looks forward to meeting the trustees as soon as is appropriate. Melrose has an impeccable track record of safeguarding and improving pensioners' rights in every acquisition it has made," it said at the time
