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Terra Firma drops Boots bid plan Terra Firma drops Boots bid plan
(about 3 hours later)
A consortium led by private equity firm Terra Firma has decided to withdraw its interest in a takeover offer for Alliance Boots. A consortium led by private equity firm Terra Firma has decided to withdraw its interest in a takeover offer for health and beauty retailer Alliance Boots.
The move looks set to leave the way clear for private equity firm Kohlberg Kravis Roberts (KKR) and Boots' deputy boss Stefano Pessina to buy the firm. The move looks set to leave the way clear for private equity firm Kohlberg Kravis Roberts (KKR) and Boots' deputy boss Stefano Pessina to buy Boots.
On Monday evening, KKR upped its offer for the health and beauty retailer to £11.1bn ($22.2bn). The group told the BBC that it already owns 29.3% of Alliance Boots stock.
If the deal goes ahead, it will be the UK's biggest private equity buyout. KKR's offer is now worth £11.1bn ($22.2bn), making it the UK's biggest private equity buyout.
The Terra Firma consortium - which also includes medical charity the Wellcome Trust and banking group HBOS - said it was "disappointed" not to be able to go ahead with its £10.8bn bid.The Terra Firma consortium - which also includes medical charity the Wellcome Trust and banking group HBOS - said it was "disappointed" not to be able to go ahead with its £10.8bn bid.
"However, we are pleased that the shareholders of Alliance Boots have received a significantly higher price due to our interest, and we wish the company and all its stakeholders well under new ownership," it said in a statement."However, we are pleased that the shareholders of Alliance Boots have received a significantly higher price due to our interest, and we wish the company and all its stakeholders well under new ownership," it said in a statement.
News of the decision came after the group held a meeting with the Boots board.News of the decision came after the group held a meeting with the Boots board.
Board supportBoard support
Boots' board of directors has already backed the takeover offer from KKR and Mr Pessina, who owns 15% of Boots. Boots' board of directors has already backed the KKR takeover offer. Mr Pessina himself owns 15% of Boots.
Market observers have estimated that KKR and Mr Pessina now own at least 25% of Boots shares, and may have as much as 28%.
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 Robert Peston on Boots battle Alliance Boots' share priceOne 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 Robert Peston on Boots battle Alliance Boots' share price
KKR's new bid is worth 1,139 pence per share to Boots investors. On Monday evening, KKR had raised its bid to 1,139 pence per share.
The private equity firm and Mr Pessina said that they tabled the offer after buying 49.7 million shares at the higher price.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."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.
"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 added."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 added.
Broad reachBroad reach
KKR first made an approach in early March, but was turned down because the offer price was too low.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.
The company was formed last year through the merger of Boots and Alliance UniChem.The company was formed last year through the merger of Boots and Alliance UniChem.
The Alliance UniChem business was built up from a family concern by Mr Pessina, and he is seen as wanting to win control of the group so he can delist its shares and grow the business away from intense stock market scrutiny.The Alliance UniChem business was built up from a family concern by Mr Pessina, and he is seen as wanting to win control of the group so he can delist its shares and grow the business away from intense stock market scrutiny.