Alliance Boots, the British drugs retailer and wholesaler, said on Friday it had received an improved 10 billion-pound ($19.7-billion) bid proposal from its deputy chairman and private equity firm Kohlberg Kravis Roberts .
The company said the new proposal from Stefano Pessina and KKR was 1,040 pence a share in cash, up from a previous proposal of 1,000 pence a share, and that it would allow its suitors a limited period to examine its books.
"The board has agreed to grant Kohlberg Kravis Roberts & Co. and Stefano Pessina a limited period to undertake confirmatory due diligence," Alliance Boots said in a statement. "A further announcement will be made as and when appropriate."
Alliance Boots, created last year from the merger of health and beauty retailer Boots and drugs distributor Alliance UniChem, had rejected the previous 1,000-pence-a-share proposal as too low.
Pessina masterminded last year's merger and is Alliance Boots' biggest shareholder with a 15% stake.
Sources close to the matter told Reuters on Sunday that private equity group Terra Firma was also considering a bid for Alliance Boots, but was struggling to find an investment bank that was not already involved in a retail deal to both advise it and help finance an offer.
Alliance Boots shares closed at 1,027 pence on Thursday.