Takeovers - Trustee Muscle?

What influence do pension scheme trustees have on a proposed Takeover of a sponsoring employer ("Target Company")?

Where the Target Company's shares are listed on the London Stock Exchange the Takeover Code (the "Code") applies. The main purpose of the Code is to protect the Target Company's shareholders from unfair treatment. In the case of listed and unlisted companies, trustees may have other leverage.

In its consultation earlier this year (21 March 2011) the Takeover Panel (the body responsible for administering the Code) canvassed views on obliging the bidder to engage with employee representatives as "persons affected" by a bid. The Takeover Panel received many representations from pension scheme trustee boards that trustees should also be included as "persons affected". The main rationale behind this request being the impact takeovers may have on the security of scheme members' benefits and the actions scheme trustees may take which may affect company