UK - A spokesman for former Marconi division, telent, has claimed former buyout proposals were too expensive, after today's bid by Pension Corporation for the company's shares.
Monica Coull, head of communications at telent, told Global Pensions: “Last year, we received buyout proposals costing over £1bn, which frankly was far too expensive.”
The deal, which would net buyout firm, Pension Corporation, £2.5bn in pension assets, has been strongly recommended to shareholders by directors and would be the largest pension liability transfer in the buyout arena to date.
Coull continued: “We had been exploring other proposals, but Pension Corporation came to us with an unsolicited share buyout offer which we think is a good deal.”
Following the sale of its international and equipment business, telent placed £185m into the pension fund in 2005.
A further £490m was put into an escrow account which has since grown to £514m. This cash is specifically earmarked for the pension fund and although the figure appers on telent's balance sheet it would not be available to its buyers.
Andrew Reid, head of corporate consulting, Watson Wyatt, commented on the proposed deal: “It is another significant step in the development of the secondary market for pension liabilities.”
Reid continued: “Post acquisition, it looks like the pension liabilities and assets will be separated from the operating business. Pension Corporation adopted similar principles in previous acquisitions, selling off the operating business fairly quickly.”
This sentiment would appear to be echoed by telent chairman, John Devaney, who said: “This is a good outcome for shareholders and will allow the management team to focus exclusively on the development of the operating business.”
Edward Truell, group CEO, Pension Corporation, said: “We have established Pension Corporation to be holder of pension funds over the long term.”
Truell added that the pension fund provided for 65,000 UK workers.
Pension buyout specialist, Synesis, denied it had been in negotiations to buy out the telent fund in May 2006.
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