Morrisons recommends CD&R offer; pension surplus rises to £897m

Morrisons’ net defined benefit (DB) pension scheme accounting surplus increased by £181m to £897m in the first half of 2021, its interim results report has revealed.

As reported by our sister title, Pensions Age, the report stated that the trustees of the Safeway Pension Scheme completed a further £207m buy-in for part of the scheme in June 2021, bringing the cumulative pensions buy-in total so far to £1,353m.

This is the fourth buy-in policy that the scheme has entered into and Morrisons stated that it will continue to work with the pension trustees to identify opportunities to de-risk.

The report also revealed that Morrisons has recommended Clayton, Dubilier & Rice’s (CD&R) takeover offer of 285p per share.

In August, the trustees of the Morrisons Retirement Saver Plan and the Safeway Pension Scheme raised concerns that a deal could “materially weaken” the existing sponsor covenant supporting the schemes.

Morrisons stated that, in addition to the financial terms of CD&R’s offer, it has placed “significant emphasis” on the important role that Morrisons plays for all stakeholders, including pension trustees.

“The cards have again shuffled on the private equity bargain hunters seeking to acquire W M Morrison,” commented Hargreaves Lansdown senior investment and market analyst, Susannah Streeter.

“Although there is still a chance an auction scenario could play out, it looks like the higher bid from CD&R might now be on a smooth conveyor belt to approval with the company recommending its offer of 285p per share. 

“There is of course still a chance Fortress will wade in with a higher offer and these latest results will offer plenty of food for thought over whether an even higher bid is justified.”

Commenting within the report, Morrisons chief executive, David Potts, said: "I want to thank all Morrisons colleagues for their unswerving dedication and commitment during the long pandemic period.

“Their innovation, enterprise, hard work and boundless compassion have shone through, and a new Morrisons is taking shape. You are a special team and together have built a strong and broad foundation on which Morrisons will thrive in the future."

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