Bidder's delirium

20 April 2007 By John Foley Follow @johnsfoley

No sooner had the retailer s board recommended a 1090pashare offer from KKR, than a rival group led by Guy Hands jumped in with 1126p. Maybe Boots board was wrong to think KKR’s initial 1040p deserved its support. More likely, KKR and Hands have a case of bidder s delirium.

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The board of Alliance Boots, the UK healthcare retailer, agreed to recommend an offer of 1090p a share from buyout firm KKR and its own deputy chairman, Stefano Pessina, on Friday morning. Within hours, a rival consortium, led by UK investor Guy Hands and his investment vehicle Terra Firma, made a counteroffer of 1126p, conditional on due diligence.

Terra Firma's bid, which values Boots at £12.1bn including debt, was 8% above KKR's opening approach of 1040p a share on March 30. Of that amount, £105m or 11p a share would be paid to KKR as a break fee in the event that the board withdrew its recommendation. On Friday morning, Boots shares had traded above 1140p.

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