KKR-Pessina combine to buy Alliance Boots for $22.2 billion

Mumbai: The Kohlberg Kravis Roberts & Co-Stefano Pessina combine won the takeover battle for Alliance Boots Plc, the largest drugstore chain in the UK, beating financier Guy Hands with an improved 11.1 billion pounds ($22.2 billion) bid.

The deal values Alliance Boots at 1,139 pence per share – 40 per cent above the price on March 8, the day before talks were disclosed, Pessina, Alliance Boots's deputy chairman and largest shareholder, said.

Hands' Terra Firma Capital Partners Ltd. withdrew its bid after KKR and Pessina acquired at least 26 per cent of the company's stock.

The takeover, Europe's biggest ever leveraged buyout, gives KKR control of 3,100 stores and a wholesale drug supplier to more than 125,000 pharmacies and hospitals.

KKR, which has been involved in $109 billion of buyouts this year, including TXU Corp. for a record $44 billion, increased its bid three times for Alliance Boots.

Italian-born Pessina, 65, is ranked 407th in Forbes magazine's 2007 list of world billionaires with a fortune of $2.3 billion. Starting with an inherited Alliance Sante, he sold the drugs company to UniChem Plc in 1997 and later became chairman of Alliance UniChem Plc, which merged with the former Boots Group last year.

Alliance Boots, which said the deal might be completed by July, aims to cut costs by 100 million pounds a year by 2010.

Alliance Boots shares fell 5 pence to 1,121.5 pence at 3:17 p.m. in London.