Boots the Billionaire

Kohlberg Kravis Roberts & Co. (New York), the U.S. private equity firm, and Stefano Pessina, an Italian billionaire, won the takeover battle for Alliance Boots plc (London), Britain’s largest drugstore chain, in Europe’s biggest private equity buyout.

Kohlberg Kravis and Pessina, who is Alliance Boots’ deputy chairman and largest shareholder, agreed to pay about $22 billion. An ongoing bidding battle between this group and another suitor – a group that included Terra Firma Capital Partners Ltd. (London) and the Wellcome Trust (London), a medical charity – drove the offer to more than 40 percent above the company’s share price before takeover talks started earlier this year.

The rival bid was withdrawn earlier this week, after Kohlberg Kravis and Pessina had bought enough Alliance Boots shares to block any other bid. On Monday, they acquired 90 million Alliance Boots shares to bring their combined holdings to about 26 percent.

Alliance Boots, whose roots as Boots the Chemist go back to an herbal remedies shop started by the Boot family in 1849, sells beauty products, drugs and snacks through a chain of 3100 stores and, through a wholesale drug supplier, more than 125,000 pharmacies and hospitals. The company was created last year from the merger of Boots and drugs wholesaler Alliance UniChem (London).

Pessina, a nuclear engineer by training, turned his family's ailing Naples drug wholesaler into UniChem and then masterminded the merger with Boots. After the merger, the combined company had started a cost-cutting program, which the new owners say they intend to speed up.