Morrisons' pension trustees agree support package with CD&R

Morrisons' pension trustees have agreed a support package for the firm's schemes should Clayton Dubilier & Rice (CD&R) be successful in its proposed takeover of the supermarket.

Concerns had been raised that the initial deal between Morrisons and CD&R could “materially weaken” the existing sponsor covenant supporting the Morrisons Retirement Saver Plan and the Safeway Pension Scheme.

However, the trustees have reached an agreement with the buyer that, should the transaction go ahead, there will be a package of measures to support the schemes’ journeys to buyout.

The package includes additional security to be contributed to the existing pension funding partnership structure through further properties with an ‘appropriate’ release mechanism to allow for a gradual release of the additional security as the schemes move towards buyout.

It also includes ‘enhanced governance provisions’ for the schemes.

The trustees said that they welcomed CD&R’s “constructive engagement” and were pleased with the progress that had been made.

Contractual details with CD&R still need to be made ahead of the shareholder meeting to secure additional protection for members’ benefits, according to the trustees, who also stated that they were looking forward to continuing to work with CD&R and Morrisons in the future to protect benefits, should the deal go ahead.

The trustees added that, following professional advice, they were satisfied that the package of measures will provide “sufficient and appropriate support” for the schemes.

Morrisons chair, Andrew Higginson, commented: "The Morrisons Board is pleased that the trustees and CD&R have engaged constructively and have now reached an agreement, which safeguards the interests of the members of Morrisons' pension schemes."

Earlier this month, Morrisons recommended CD&R’s offer of 285p per share.

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