NETHERLANDS/UK - Dutch paints giant Akzo Nobel said it has reached an agreement with the trustees of the Imperial Chemical Industries (ICI) pension fund which will see it continue to support the fund. (Updated with comment from ICI trustees).
Akzo Nobel’s chief financial officer, Rob Frohn, commented during this morning’s analysts’ meeting - scheduled following Akzo Nobel’s successful £8bn bid for the UK paints producers - he did not foresee any problems in the transfer of ICI’s pension liabilities.
The company also said it will keep offering ICI employees their current redundancy and retirement terms for two years after the takeover is concluded.
The trustees of the ICI Pension Fund commented they are “pleased that Akzo Nobel engaged with us directly in constructive, private negotiations to reach a satisfactory agreement, before making any formal offer for ICI shares.”
The fund’s trustees added: “We have been offered a clear and unequivocal guarantee directly from a solid, investment-grade company. The Trustee appreciates the responsible approach of both ICI and Akzo management to the wider interests of other stakeholders, including pension fund members”
In June, the trustees of the £6.5bn (€9.3bn) pension fund voiced sharp warnings to possible suitors, saying that it expected ICI bidder to engage in up-front talks with the scheme.
ICI, producer of the Dulux paint brand, has seen business seen business seen slim down over the past decade. That said, under ICI chief executive (CEO) John McAdam’s attempts to strengthen the company’s balance sheet, the net pension deficit fell during the year from £1.7bn to £1.3bn - and had fallen to £721m by June 2007.
Despite announcing some jobs will be lost, commenting on today’s announcement, Hans Wijers, CEO of Akzo Nobel, said: “Our customers, employees, pension funds and other stakeholders will benefit from the size and reach of the enlarged group.”
Akzo Nobel confirmed it will finance the move with the sale of its pharmaceutical division earlier this year to American Schering-Plough, and the pre-agreed on-sale of ICI’s Adhesives and Electronic Materials businesses to Germany’s Henkel.