Melrose Industries PLC (LON:MRO) said it has reached an agreement with the trustees of GKN PLC ‘s (LON:GKN) pension schemes as part of its £8.1bn hostile bid to buy the engineer.
The turnaround specialist will contribute up to £1bn to fund the pension scheme, as previously announced.
"The agreement with the GKN Pension Scheme Trustees is another concrete example of Melrose's exemplary track record with pension schemes and its desire to look after all stakeholders,” said Christopher Miller, executive chairman of Melrose.
“This agreement would significantly improve the position of the members of GKN's pension schemes and is in line with our original plans for the business. We are delighted to secure another important step in our offer to buy GKN."
Melrose silences GKN
The announcement comes a day after GKN said it was “remarkable” Melrose had failed to reach an agreement with pension trustees on its proposed contribution 11 weeks since the start of its hostile takeover approach.
READ: GKN tells shareholders to vote against 'opportunistic' Melrose bid as deal deadline looms
GKN has recommended shareholders vote against Melrose’s takeover offer and instead back its plan to sell the automotive division, Driveline, to Dana Inc (NYSE:DAN) in a deal valued at US$6.1bn.
GKN's pension contribution
The engineer has agreed to contribute £625mln into its UK pension schemes and Dana will put in a further £124mln, implying a total contribution of £749mln.
GKN has also promised to halve its pension liabilities, eliminate its pension deficit and “substantially reduce” the future volatility of remaining schemes.
Melrose has attacked GKN’s strategy to become a standalone aerospace business, telling shareholders they would be left with nursing up to £3bn of pension liabilities.
Shareholders have until March 29 to decide whether to accept Melrose’s third and final offer or back GKN's plan to merge Driveline with Dana.