LONDON (Reuters) - Walmart's (N:WMT) Asda has agreed a 3.8 billion pounds ($4.9 billion) 'buy in' with Rothesay Life to secure the benefits for 12,300 members of one of its pension schemes, in a deal that simplifies its balance sheet ahead of a possible standalone listing.
The British supermarket group said the deal will be followed by a full buy-out of the scheme in late 2020 or early 2021 after it had paid a one-off final contribution of about $1 billion.
Walmart CFO Richard Mayfield said the company was delighted to be able to secure the pensions of its members with a leading, well financed insurer such as Rothesay Life.
"This transaction is good news for members of the scheme, simplifies the Asda balance sheet and will transfer our pension liabilities at a competitive price," he said.
Rothesay Life said it was seeing an increasing number of very large schemes, with strong corporate sponsors, looking to insure pension liabilities, a trend that resulted in it writing a record level of pension business in 2019.
It said it now insured more than 800,000 people in pension schemes and managed 56 billion pounds of assets.
Asda said its defined contribution pension plan, that provided ongoing pension arrangements to the majority of its staff, was not included in the deal.
In April Sainsbury's (L:SBRY) 7.3 billion pounds agreed bid for Asda was blocked by Britain's competition regulator. A month later Walmart said it would instead look at an initial public offering for Asda and in July Asda CEO Roger Burnley said this could happen in two to three years.