NETHERLANDS/UK - The £6.5bn (€9.63bn) Imperial Chemical Industries (ICI) pension fund is warning it expects ICI bidders to engage in up-front talks with the scheme, following failed takeover talks with Dutch paints major Akzo Nobel.
Akzo Nobel did not approach the pension fund trustees during the informal talks with the troubled British chemicals firm.
"If people were looking at ICI, then an early dialogue with pension fund trustees would be most welcome," the fund said.
The fund has is arguing it needs dialogue with potential bidders because in the case of a highly leveraged bid, where the pension fund guarantees offered are not as good as they are with the current corporate sponsor, the fund would have to change its investment policy and this would have an automatic effect on deficit calculations.
"In that situation it makes sense for early dialogue to happen," according to the fund.
The fund, which had a deficit of £840m according to ICI's Q1 result, has not been approach by any other parties.
At the same time, Akzo Nobel has declined to comment whether it would now enter into further talks with ICI.
ICI confirmed today its board rejected Akzo Nobel's takeover bid valued at £7.2bn as too low, triggering the prospect of competitive bids from German rival BASF, the American DuPont or Dow Chemical.
All three firms declined to comment whether they have or would make a bid or confirm if they would approach pension fund trustees for up-front talks for in the case of a takeover bid.
Elsewhere, Lane Clarke & Peacock (LCP) has argued pension scheme trustees need to be informed very early in the negotiation stage of a possible merger.
The company made the remark to IPE in an interview on pension issues in M&A deals.
"It has to be kept in mind that trustees might need to appoint an adviser," LCP's Michael Berg said. "They have to have time to increase their own understanding of consequences of the merger."
He said increasingly pension fund issues are increasingly the first subject to be discussed in merger negotiations but added pension fund issues can sometimes be deal-breakers.
"That does not mean that the pension issue ends there but sometimes the deal ends there," said Berg.
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