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Barnett Waddingham Comments On Takeover Panel Pension Consultation

Andrew Vaughan, partner at Barnett Waddingham, the UK’s largest independent firm of actuaries, pension administrators and consultants, commenting on the launch of the Takeover Panel’s consultation on proposals make bidding companies reveal their plans for the pension scheme of the organisation they are trying to purchase, said:

“Responses to a previous Takeover Panel consultation last year criticised its failure to include pension scheme trustees as stakeholders in takeover bids. The Takeover Panel said that it would carry out a separate consultation in due course, and it has been true to its word.

“The proposed changes focus on requirements to provide information to trustees and for their response to be disclosed to the bidder. We welcome this as an eminently sensible concept.

“Some parties (for example trustees and union representatives) might say the changes should incorporate additional protection for scheme members, but there is very little in this consultation in that regard. We would not wish to see bidders hindered in taking practical approaches to unlocking the value they see in subject companies, and so we welcome the line taken in this consultation. For example, proposals (including those in relation to pension arrangements) set out within the offer document must be adhered to for a period of 12 months and the consultation does not propose to extend this period. It does suggests, however, that trustees should record agreements in a separate document which could offer greater legal recourse if needed.

“The consultation notes that trustees, upon receiving details of a bidder's intentions towards the pension arrangements, will wish to take advice which could be substantial in nature. The proposals do not require the company under offer to meet costs incurred by the trustees in taking advice, but notes that in many cases the company will be responsible for meeting all costs of running the scheme.

“In our experience companies usually take appropriate advice and typically engage directly with trustees where the pension scheme is a significant component of a takeover. Therefore in our view, the proposals should not have a significant impact given the way takeovers work in practice at the moment.”

For more information please contact Andrew Vaughan or Steph Gold.

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