U.S. News

Terra Firma Confirms Looking at Alliance Boots


Private equity group Terra Firma and medical charity Wellcome Trust confirmed on Tuesday they were at the early stages of considering a counterbid for Alliance Boots, Britain's biggest pharmacy chain.

"Terra Firma and the Wellcome Trust confirm that they are at the early stages of assessing Alliance Boots. No decision has been made regarding the merits of making an offer for Alliance Boots," Terra Firma and the Wellcome Trust said in a statement.

Alliance Boots opened its books in March to buyout firm Kohlberg Kravis Roberts & Co. and Alliance Boots Deputy Chairman Stefano Pessina -- a billionaire with a 15% stake in the company -- after they sweetened their initial offer from 1,000 pence a share.

An offer from Terra Firma, which owns U.K. cinema chains and waste management firms, would need to rival the 10 billion pound ($19.7 billion) offer from KKR and Pessina, which offers the company's shareholders 1,040 pence a share.

People familiar with the situation told Reuters on Sunday that Alliance Boots planned to provide detailed financial information to a new suitor mulling a rival takeover bid.

No other formal approaches have been received by Alliance Boots so far, a source told Reuters on Sunday, although other sources have told Reuters that Celesio, the German owner of the Lloyds pharmacy chain, is exploring a possible bid with private equity firms.

Shares in Alliance Boots closed up 0.6% at 1,035 pence on Tuesday.

The Wellcome Trust has an endowment of around 13 billion pounds and is Britain's biggest investor in private equity.

Alliance Boots sells medicines, beauty products and sandwiches, and also runs a drugs distribution business. The group was created last year through the combination of the 150-year-old retailer Boots with drugs wholesaler Alliance Unichem.

Terra Firma and the Wellcome Trust have appointed Lehman Brothers International as financial adviser.