The UK high street continues to be the main focus of
private equity bid talk, as traders await a higher offer for
On Tuesday Alliance Boots’ share price was trading at a 3% premium to the initial £10 per share cash approach made by
The board of Alliance Boots, led by chairman Sir Nigel Rudd, along with its financial adviser
Now, it has emerged that US bank
One of the preconditions they had both set for a bid to go ahead was to have the backing of Alliance Boots’ board. Without it, KKR will have to raise its proposal price, walk away, or go hostile. The latter is unlikely, not only because limited partners do not like to be associated with these situations but also due to the negative feeling surrounding the industry at the moment. However sources suggested that if Pessina/KKR does raise its offer, a substantive rise is unlikely.
The Boots bid is one of the rare occasions that KKR has not partnered with a fellow financial buyer to pursue a retail target. But it is the latest in a long list of global retail investments by the fund. At the beginning of the week, for example, KKR agreed to buy Dollar General, a listed discount retailer in the US for about US$7.3bn.
KKR is also involved in the consortium currently considering a bid for
Sources suggest that if KKR did pull out of the consortium because of its Boots bid, other private equity firms such as Cinven and Bain would be waiting in the wings to take its place.
A spokesman for the consortium told Thomson Financial that it had had “communication” with the board of
“There has been contact between the two parties but it’s not true that we have discussed a price of 550p and above,” the spokesman said.
Under the Takeover Panel’s “put up or shut up” ruling, the consortium, which also comprises Kohlberg Kravis Roberts (KKR),
Sainsbury shares were trading at 527p on March 14, up 6-1/2p, valuing the company at just under £9.8bn (€14.3bn).
The shares have risen sharply from a level of 445-1/4p before last month’s announcement that the consortium was assessing a bid, which analysts say lengthens the odds against an offer materialising. Some analysts believe the consortium will wait for a significant fall in the share price before making a bid. A deal at 550p would value Sainsbury at about £10.2bn (€14.9bn).
Henry Gibbon, Adam Durchslag