A rival bid for Alliance Boots

Alliance Boots shares reached new highs as unsubstantiated reports claim Terra Firma and Apax are preparing a bid.

Shareholders of listed UK pharmaceutical chain Alliance Boots are uncertain what to make of unconfirmed reports of new private equity bidders. Alliance Boots saw its shares reach a new high of £10.49 in intraday trading on March 23. Newspaper reports on March 25 claimed that UK-based buyout firm Terra Firma was studying the possibility of a rival bid.

Shareholders would be delighted if a rival bid drove up the £10 per share price offered by Alliance Boots’ deputy executive chairman Stefano Pessina with the backing of US buyout firm Kohlberg Kravis Roberts (KKR).

It is difficult to determine how much heed to pay these reports which also claimed that Apax Partners was in early preparations to bid for the group. Meanwhile, the retail experts at Apax Partners are currently not showing any interest in outbidding the offer amounting to £10bn (US$20bn), according to a source.

Meanwhile, Alliance Boots has issued a decidedly positive trading statement, with full-year results in line with targets. The group will apparently reap the benefits of the cost synergies expected from the merger.

Alliance Boots was created from the merger of Boots Group and Alliance UniChem last July. Pessina had been executive deputy chairman of Alliance UniChem and a 30% shareholder.

UK retail shares have been boosted by a flurry of reports involving private equity bidders. Apart from Boots, a private equity consortium appears to be stalking UK supermarket chain Sainsbury. Apart from KKR, the consortium is believed to include CVC Capital Partners, Blackstone Group and Texas Pacific Group.

Alex Wessendorff