UK - PricewaterhouseCoopers Legal (PWC Legal) has rocked the perception that trustees have the power to scupper potential deals and acquisitions.
Louise Inward, head of pensions at PWC Legal, rejected the notion because there was often no legal basis for it.
In practice, Inward said only a fraction of trustee boards had the power to insist on full funding at the time of a deal.
She explained: “The valuation of the pension liabilities in deals can become a contentious issue because of the potential variation in the assumptions used. Companies or buyers may view some trustees as recklessly prudent in their funding requirements, and in a hostile takeover situation a high funding requirement from the trustees will inevitably be perceived as a defensive tactic.”
Inward added that private equity investment was not necessarily a bad thing, and there had to be a balanced playing field.
Her comments came after trustees in the Alliance Boots pension scheme recently demanded approximately £1bn from its potential private equity owners to cover a shortfall.
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