Bidding war breaks out for Boots

Barely hours after private equity firm Kohlberg Kravis Roberts (KKR) and Stefano Pessina, the billionaire deputy chairman of Alliance Boots, had won the management's backing for a £10.6 billion (approximately Rs 89, 305 crore) for takeover (See: Boots backs KKR's £10.6 billion takeover bid), a bidding war has broken out for Europe's largest pharmacy and cosmetics retailer.

A rival group that includes private equity firm Terra Firma, medical charity The Wellcome Trust, and banking group HBOS said it may table an offer worth £10.8 billion.

The news of the rival bid sent Alliance Boots' shares climbing 8.2 per cent, closing 86 pence higher at £11.35 in London today.

However, Terra Firma has qualified by saying that its £11.15 per share proposal was conditional on the examination of the Boots' books, while the KKR-Pessina combine's £10.90 per share offer is a firm bid.

A spokesman for KKR said that its position was "superior to the uncertainties of the other camp."

Whichever way the bidding moves, Alliance Boots has already ensured a ranking as the UK's largest private equity acquisition.

Alliance Boots was created in a £7 billion tie-up with chemist chain Alliance Unichem and Boots Healthcare International last year. Of its chain of 3,000 chemist shops, 2600 are located in the UK with another 400 overseas outlets in various countries including Thailand and Italy.