Melrose has pledged £1bn to GKN’s pension scheme as part of its offer to take over the engineering firm.

In a statement published today, 19 March, Melrose confirmed that it has had a series of “constructive discussions” with the trustees of the GKN pension scheme. It confirmed that last week it made a “formal proposal to inject up to c. £1bn over the Melrose ownership period” into the scheme.

It said this represents almost twice the amount of the deficit reduction package under GKN's planned disposals.

In addition, Melrose chairman Christopher Miller said unless they accept the offer, GKN shareholders will end up with shares in an aerospace business “overburdened with up to £3bn of pension liabilities” upon the planned disposals, and a “minority shareholding in a Dana-managed Driveline business without a UK primary listing, which many won't be able to hold”.

“The proposal we have made to the trustees of up to £1bn of contributions under our ownership is a clear example of what Melrose does which is good for pensioners and shareholders alike and shows we are a good custodian for all stakeholders,” he added.

Last week, Melrose made a final offer of £8.1bn in its hostile takeover bid. On GKN’s intentions to sell some of its businesses to Dana, Melrose said that it would leave behind GKN Aerospace, “burdened by a disproportionate, and very substantial, amount of gross pension liabilities, inappropriate for the size of the underlying business”.

Pensions Age is awaiting a response from the GKN pension scheme trustees.

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