Pension concerns scupper PE firm’s interest in Vita

A MULTI-million pound takeover of the Oldham-based industrial group Vita has fallen through amid concerns about its defined benefit pension scheme.

Private equity firm LDC which is owned by Lloyds Banking Group, has backed out of talks to buy Vita, which makes foam fillings for mattresses, nappies and car parts.

Sky News sources say negotiations between LDC and TPG – owner of Vita since 2005 when it bought the company for £700m – have collapsed within the last few days.

LDC is believed to have been worried about the future of the company’s defined benefit plan following the controversy over a similar scheme at BHS, the high street retailer which fell into administration in the spring.

“BHS definitely cast a shadow over this deal,” an insider is quoted as saying. “LDC simply couldn’t get comfortable with it.”

Although Vita’s pension scheme does not have a substantial deficit, LDC is said to have been concerned‎ about future developments.

The Pensions Regulator was not involved in the discussions about the sale, insiders said.

The row over BHS’s fate has led to calls for the regulator’s powers to be strengthened to enable it to intervene more robustly in takeover situations.

Since Vita was acquired by TPG, the company has been significantly reshaped since then, selling more than 30 subsidiaries outside its core focus on polyurethane foams, polystyrene and adhesives production.

Vita has expanded its operations in Bulgaria, Croatia‎ and Serbia, and opened additional factories in eastern Europe.

The company’s most recent UK accounts showed a 5% increase in sales in 2015 to €605m, with earnings before interest, tax, depreciation and amortisation up by 30% to €52.5m.

Both LDC and TPG have not commented.