LONDON — The bidding war for control of Alliance Boots has begun.
Shortly after private equity firm Kohlberg Kravis Roberts & Co. and Alliance Boots' executive deputy chairman Stefano Pessina received the green light from Alliance Boots' board for their joint 10.6 billion pound, or $21.25 billion at current exchange, takeover bid Friday morning, a rival consortium — comprising Terra Firma private equity company, the Wellcome Trust medical research charity and HBOS banking group — said it may trump that offer.
While the Terra Firma-led consortium said in a regulatory statement Friday there is no certainty its offer will be forthcoming, the group said it had provided Alliance Boots' board with the terms of an "indicative proposal" of 11.26 pounds, or $22.57, per share. If a deal were to go ahead, that per-share bid would be reduced to 11.15 pounds, or $22.35, because of a "break fee" Alliance Boots would be obliged to pay AB Acquisitions Ltd., the company formed by KKR and Pessina to implement the takeover transaction.
AB Acquisitions secured the backing of Alliance Boots directors with an offer of 10.90 pounds, or $21.85, per share.
"The formation last year of Alliance Boots created a hugely valuable business and this offer reflects that," said Sir Nigel Rudd, chairman of Alliance Boots in the KKR regulatory statement. "I am delighted that the board has been able to achieve such a good price for shareholders."
In its regulatory statement, Terra Firma urged Alliance Boots' shareholders to "take no action."
Referring to the Terra Firma consortium's approach, Alliance Boots said in a regulatory announcement it is continuing to provide high-level due diligence, including access to senior management.
"The board of Alliance Boots has made no change to its intention to recommend the offer by Kohlberg Kravis Roberts and Stefano Pessina," the firm said.
KKR and Pessina, who first indicated their interest in a takeover bid on March 9, initially put forward a potential offer of 10 pounds, or $20.04, per share.
When that was turned down by the Alliance Boots board on March 12, the consortium raised its possible offer price to 10.40 pounds, or $20.85 per share, on March 29. It eventually settled on a firm bid of 10.90 pounds, or $21.85, last Friday.Analysts believe KKR and Pessina could raise the offer again.
"Nothing would surprise me," said Richard Ratner, London-based chief retail analyst at Seymour Pierce. The flurry of interest in Alliance Boots comes less than a year after the company was formed following the merger of Boots Group, parent of health and beauty retailer Boots the Chemists, and Alliance UniChem, a pharmaceuticals wholesaler and pharmacy retailer, in July 2006.
Pessina's involvement in a takeover bid raised eyebrows among the financial community, since he had championed the merger. He is Alliance Boots' largest shareholder, with a 15 percent stake.
In the statement released last Friday, Pessina and KKR jointly outlined their reasons for a possible acquisition.
"Kohlberg Kravis Roberts and Stefano Pessina believe that the rapid structural changes in the pharmacy retail and wholesale markets in Europe will require an acceleration of Alliance Boots' transition to a pharmacy-led health and beauty and services-oriented business," they wrote. "It is intended that this be carried out alongside the implementation of the integration plan and the execution of a targeted international acquisition program. Kohlberg Kravis Roberts and Stefano Pessina believe that this can be best executed under private ownership."
Alliance Boots has 3,100 retail outlets and operates its pharmaceuticals wholesaling business in 14 countries.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews