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Private equity group Kohlberg Kravis Roberts and Stefano Pessina have won the takeover battle for Alliance Boots, Britain's largest drugstore chain, beating financier Guy Hands' Terra Firma with a sweetened bid of £11.1 billion ($29.9 billion).
The takeover, Europe's biggest leveraged buyout, gives KKR control of 3100 stores and a wholesale drug supplier to more than 125,000 pharmacies and hospitals.
KKR has been involved in US$109 billion ($146.4 billion) worth of buyouts this year.
"They've been forced by Terra Firma into paying more," said Robert Clark of London's Retail Knowledge Bank. "You wonder what the ultimate value is, and you have to assume that it's more than this. Pessina clearly has a long-term vision for the company."
KKR increased its bid three times for Alliance Boots. The winning price was 4.5 per cent more than the firm's last offer and 2.2 per cent above the April 20 proposal from Terra Firma.
Alliance Boots shares fell 5p, or 0.5 per cent, to 1121.5p in London. KKR said after trading ended yesterday that its group secured about 29 per cent of the stock.
Italian-born Pessina, 65, ranked 407th in Forbes magazine's 2007 list of world billionaires with a fortune of US$2.3 billion. After starting with an inherited drug business, he sold his Alliance Sante company to UniChem in 1997 and later became chairman of Alliance Unichem, which merged with the former Boots Group last year.
KKR will "work in partnership with Pessina and the management team to achieve the long-term vision of building a global leader in global healthcare services," KKR partner Dominic Murphy said.
Alliance Boots, which said the deal might be completed by July, aims to cut costs by £100 million a year by 2010.
KKR and Pessina have said they want to accelerate the cost-reduction plans and make acquisitions outside Britain. The company has completed 150 takeovers worth US$279 billion including debt since it was founded three decades ago.
Terra Firma was started by Hands in 2002 and has invested in companies from Odeon and UCI Cinemas to Waste Recycling. In October, he failed to buy RWE AG's Thames Water unit after being outbid by Australia's Macquarie Bank.
