Melrose considering de-risking £500m GKN pension scheme

Written by Theo Andrew
31/08/18

Melrose is exploring de-risking options with a number of insurers for its £500m GKN pension scheme, it has been reported.

According to a Sky News report, Melrose has opened talks with Aviva and Scottish Widows around offloading the smaller of GKN’s pension scheme it inherited after the takeover.

Earlier this week, it was said that the aerospace giant put on hold plans to sell one of its American subsidiaries for $800m from which funds were marked for the GKN pension scheme.

A Melrose spokesperson said: "Melrose has pledged to inject £1bn into the former GKN pension funds.

"That pledge will be met regardless of any other measures, such as buyouts from specialist providers to enhance the pensioner covernant.

"Any deal would depend on pricing."

Sources close to the firm told Sky News that discussions have been going on for several weeks and that Melrose would only strike an agreement to offload the GKN fund, which has liabilities of about £500m, if it could secure an attractive price.

The firm purchased GKN earlier this year in a fractious takeover, in which the American company agreed to pay a £1bn package for the pension schemes, which has 32,000 members.

The group is expected to publish a trading update in the first week of September.

In March, the £8.1bn takeover was approved in order to “create a UK industrial powerhouse”.

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