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KKR raises Boots offer to £11.1bn KKR raises Boots offer to £11.1bn
(about 1 hour later)
The takeover battle for Alliance Boots has hotted up after one of the chemist chain's main suitors raised its offer.The takeover battle for Alliance Boots has hotted up after one of the chemist chain's main suitors raised its offer.
Private equity firm Kohlberg Kravis Roberts (KKR) and Boots' deputy boss Stefano Pessina have upped their bid for Boots to £11.1bn ($22.2bn).Private equity firm Kohlberg Kravis Roberts (KKR) and Boots' deputy boss Stefano Pessina have upped their bid for Boots to £11.1bn ($22.2bn).
The move comes after a rival group said on Friday that it was interested in buying the retailer for about £10.8bn and set up talks with Boots' board.The move comes after a rival group said on Friday that it was interested in buying the retailer for about £10.8bn and set up talks with Boots' board.
Whoever wins, it will be the UK's biggest private equity acquisition.Whoever wins, it will be the UK's biggest private equity acquisition.
Head to headHead to head
Boots' board of directors has already backed the takeover offer from KKR and Mr Pessina, who owns 15% of Boots, and analysts said that they were favourites to win control of the firm. Boots' board of directors has already backed the takeover offer from KKR and Mr Pessina, who owns 15% of Boots, and analysts say that they are favourites to win control of the firm.
The new bid is worth is worth 1,139 pence per share to Boots investors, and KKR and Mr Pessina said they tabled the offer after buying 49.7 million shares at the higher price.
However, a lot will depend on how much the rival group are willing to pay, and if they table a real offer after examining the chemist chain's books, analysts said. BBC business editor Robert Peston said that KKR's initial bid already was more than many observers had expected.
KKR first made an approach in early March, but was turned down because the offer price was too low.
The rival consortium consists of private equity firm Terra Firma, which was founded by UK investor Guy Hands, medical charity the Wellcome Trust, and banking group HBOS.The rival consortium consists of private equity firm Terra Firma, which was founded by UK investor Guy Hands, medical charity the Wellcome Trust, and banking group HBOS.
One of the UK's oldest retailers is set to be owned by the American founder of the modern private-equity industry BBC business editor Robert Peston Alliance Boots' share price
According to the Terra Firma group there was no guarantee that they would table a firm offer. The group is expected to meet with the Boots board of directors on Tuesday.According to the Terra Firma group there was no guarantee that they would table a firm offer. The group is expected to meet with the Boots board of directors on Tuesday.
KKR's new bid is worth 1,139 pence per share to Boots investors.
The private equity firm and Mr Pessina said that they tabled the offer after buying 49.7 million shares at the higher price.
"Overnight, KKR, in partnership with Mr Pessina, spent more than £1bn buying almost 10% of Alliance Boots's shares," said BBC business editor Robert Peston.
"Their share raid has probably defeated the rival group of Terra Firma and the charity Wellcome Trust, which also wants to buy Alliance Boots.
"It's history: Boots, one of the UK's oldest retailers, is set to be owned by the American founder of the modern private-equity industry, KKR," he said. Broad reach
KKR first made an approach in early March, but was turned down because the offer price was too low.
Alliance Boots is best known in the UK for its 2,600 Boots the Chemist shops, and it also has 400 overseas outlets in countries including Thailand and Italy.Alliance Boots is best known in the UK for its 2,600 Boots the Chemist shops, and it also has 400 overseas outlets in countries including Thailand and Italy.
As well as the High Street retail arm, the company is a wholesale supplier to more than 125,000 pharmacies, health centres and hospitals.As well as the High Street retail arm, the company is a wholesale supplier to more than 125,000 pharmacies, health centres and hospitals.