Pensioned off

13 June 2004

In leveraged buyouts, the interests of pension fund trustees and financial sponsors could scarcely be further misaligned. There may still be scope for a negotiation. But deficits could emerge as possible dealbreakers in other retail LBOs.

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Permira's £940m bid for WH Smith has reached a potential sticking point over the company's £215m pensions deficit.

Smith's management has agreed with the pension fund trustee to make good the shortfall over 10 years. Permira wishes to continue with this arrangement, but the trustees want the privateequity house to make good the shortfall over a shorter period of time, according to people familiar with the situation.

Permira is still talking to WH Smith about £940m bid but a deal could be months away, according to a Reuters report.

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