Hands down

24 April 2007 By John Foley Follow @johnsfoley

By securing a 26% stake in the UK retailer and winning over an insider, KKR made it tough for the rival consortium to proceed. The lesson? Without some inside support, buyout firms need to be clearer about their strategies or settle for lower returns.

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KKR, the US buyout firm, raised its offer for Alliance Boots to 1139p a share, valuing the company including debt at £12.2bn. KKR also bought Boots' stock in the market. Together with the holding of Boots' executive deputy chairman, Stefano Pessina, the buyout firm had the support of 29% of Boots' shares by Tuesday's close.

Terra Firma, the buyout vehicle of financier Guy Hands, withdrew its conditional offer of 1126p a share following the news. Its offer would have been conducted as a scheme of arrangement, which requires the acceptance of 75% of Boots' shareholders, according to a person familiar with the situation.

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