Kohlberg Kravis Roberts has won the bidding war for UK health and beauty chain Alliance Boots, after sweetening its offer to £11 billion ($22 billion; €16 billion) and buying more shares to take its current stake to about 10.5 percent.
A rival group comprising buyout firm Terra Firma, HBoS and the Wellcome Trust charity today withdrew its interest in Alliance Boots after KKR upped its offer by nearly 5 per cent and acquired a blocking stake.
KKR now looks almost certain to complete the £11 billion acquisition of Boots, which will be the largest leveraged buyout in Europe to date and the first time that a FTSE 100-listed company has fallen into private equity hands.
Boots has more than 2,600 shops in the UK, which trade in pharmaceuticals, as well as health and beauty products. The chain also has 300 distribution facilities across Europe and recently began making in-roads into China.
KKR this morning increased its bid to £11.39 per share or £11.02 billion. This is a 4.5 percent increase on its earlier £10.90 per share bid, and trumps the indicative £11.26 per share bid proposed by Terra Firma on Friday.
KKR also said that it had bought another 90 million shares in the UK-listed group on Monday and Tuesday, increasing its current stake to about 10.1 percent. Since Boots deputy chairman Stefano Pessina, who is bidding alongside KKR, already holds a 15 percent stake, KKR now controls about 25 percent of the company – an insurmountable obstacle for any competing bid.
Earlier this month, KKR scuttled plans to buy UK grocer Sainsbury.
The board of Alliance Boots said today it would recommend the sweetened offer, just as it did with KKR’s £10.90 per share bid on Friday.