Alliance Boots: Leveraged Buyout

The previous days had been tough for Dominic Murphy, KKR’s Head of the Healthcare industry team in Europe, and for Stefano Pessina, Executive Deputy Chairman of Alliance Boots. Sitting in the conference room of KKR’s UK office, they were gazing at the projections for a potential investment. Their minds revolved around Alliance Boots, a multinational company operating in the pharmaceutical, health, and beauty industry and a key question had to be answered: should they increase the offer price to buy this company?
In 2007, Pessina, backed by KKR, intended to acquire and delist the newly merged firm and to improve its operations, announcing a potential offer for the shares of Alliance Boots at a 15.9% premium above the March 8th day’s close of £8.15. However, another private equity consortium, led by Terra Firma Capital Partners, also intended to take the opportunity to acquire Alliance Boots. An intense bidding war followed, which increased the offer price, leading to a final bid of £11.15 per share – a 36.8% premium offer over the undisturbed share price – made by Terra Firma’s consortium.

Author: Erik Javadi Jamal, Paulo Soares de Pinho
Reference Number: NSBE-16-19002
Number of pages: 19
Publisher: Nova School of Business and Economics
Teaching Notes: No
Language: English
Price: € 3,50

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