Authorization

Pensions scrutiny could hamper US firm's bid for control of FirstGroup

A US private equity firm’s plan to buy rail operator FirstGroup has already hit a hurdle due to the expected intense scrutiny from pension regulators and MPs keen to protect the retirement incomes of the Scottish company’s army of workers.
FirstGroup, which runs the South Western Railway and Great Western Railway franchises, was identified last year as the company most under pressure from its pension schemes relative to its size because of its more than ?4bn of pension liabilities against its ?1.2bn market capitalisation.
The Government would be keen to avoid another pension scheme collapse in the wake of recent controversies such as failed retailer BHS and British Steel, especially given FirstGroup’s defined benefit schemes cover 50,000 former and current workers.
Apollo’s bid was disclosed by the Aberdeen-based rail and bus operator on Wednesday and although the company rejected it, a more than 35pc slump in FirstGroup’s shares in the past year make it a vulnerable target.
The Pensions Regulator said it would “expect any business planning a major corporate transaction, such as a takeover, to identify if there is potential material detriment to a pension scheme and explain how they will mitigate against that detriment.”
Pensions scrutiny could hamper US firm's bid for control of FirstGroup

The Government would not want to have another pension scandal on its hands after the recent controversies surrounding failed retailer BHS and British Steel

Credit:
Neil Hall
The clearance process is a voluntary one but the Pensions Regulator said it was important to secure its approval because without it, the body was more justified in using its anti-avoidance powers.
These can look back six years and be used to identify actions taken by management which might have been detrimental to its pension schemes.
Shadow Transport Secretary Andy McDonald said: "Labour will be seeking urgent assurances from the Government that this deal protects employees and their pension schemes. If such guarantees cannot be provided, we will be calling on the Government to block the deal.”
John Ralfe, an independent pension consultant, said the recent bid by Melrose for GKN had shown how important pensions are in acquisitions.
“How Apollo will handle the pensions is a major issue, especially if the bid is debt financed,” he said.
See also:
Leave a comment
News
  • Latest
  • Read
  • Commented
Calendar Content
«    Июль 2018    »
ПнВтСрЧтПтСбВс
 1
2345678
9101112131415
16171819202122
23242526272829
3031