Germany’s Celesio is rumoured to be planning a bid to acquire UK retail pharmacy rival Alliance Boots and hijack plans for a sale to the latter’s deputy chairman and the private equity firm Kohlberg Kravis Roberts & Co.
The news follows a statement from the Nottingham-based company which noted that the board is recommending a fresh bid worth £10.40 a share (or around £10 billion) from Stefano Pessina and KKR nearly three weeks after rejecting an initial offer of £10.00 per share. Mr Pessina and KKR have been granted “a limited period to undertake confirmatory due diligence.”
However, Celesio, which operates the Lloyds Pharmacy chain, has hired NM Rothschild to sound out private equity firms to trump that offer, according to The Times. Citing unnamed sources, the newspaper says that Celesio plans to buy the community pharmacies of Alliance Boots if it succeeds in getting support from private equity firms to back a bid for the whole company. “We’ve got to carry on talking and try to get to a structure with a private equity partner first so we can make an approach,” a source said, noting that the talks, thought to be with the likes of Blackstone, Texas Pacific, Cinven and Permira, were still at a very early stage.
Due to competition rules, Celesio is not allowed to bid for all of Alliance Boots, but it is understood to have told the private equity firms that it would pay just under half the current market value of the firm, some £4-£5 billion, to take control of Moss, the community pharmacy chain owned by Alliance UniChem before its merger with Boots. That would leave the Boots high street retail outlets and the wholesale distribution arm for its private equity partner, The Times adds.
The likelihood of a rival bid succeeding seems unlikely, however, given that deputy chairman Mr Pessina is also Alliance Boots’s largest shareholder, with a 15% stake, and would not be expected to back any rival offer.