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Boots shares soar as company admits it could be sold
Last updated at 18:52pm on 09.03.07
Boots has admitted that it is the subject of a takeover bid
Boots, the high-street chemist, has emerged as the latest target of the controversial private equity industry.
Shares in the 158-year-old company soared 14 per cent after it admitted that it is the subject of a £9.7 billion takeover bid.
Friday night, the bidder emerged as the American private equity giant, Kohlberg Kravis Roberts, one of the largest and oldest firms.
In an extraordinary twist, it has teamed up with Boots's executive deputy chairman Stefano Pessina to make what it calls "a friendly approach".
The private equity industry has been lambasted in recent months for its ruthless business approach.
They were once labelled "locusts", a reference to the idea that they come in, strip all the goodness from the crop, and leave.
Boots, now called Alliance Boots, is the latest in a long line of firms to be stalked by the private equity industry.
Another high-street giant, Sainsbury's, is also the target of an industry which has already bought iconic names such as AA and Birds Eye.
About one in five private sector workers is now employed by a private equity firm.
Friday Boots, which initially refused to name the bidder, said the "possible offer" was only "preliminary and highly conditional".
It added: "There can, however, be no certainty that any offer for the company will be made."
The shares jumped 14 per cent to close at £9.30 yesterday, the best performing share in the whole of the FTSE 100 index.
In a joint separate statement, issued several hours later, KKR and Mr Pessina said they had made an approach at £10 per share.
Mr Pessina, an Italian engineer and former academic, is the biggest shareholder in Alliance Boots with a 15 per cent stake.
The move is unusual, coming just seven months after the merger of his firm Alliance Unichem merged with Boots.
The joint statement said they have made "a friendly approach" which could be completed quickly with limited due diligence and in cash.
Boots traces its roots back to 1849 when the Boot family started selling herbal remedies from a small store in Goose Gate, Nottingham.
Jesse Boot pioneered the idea of buying in bulk and selling cheaply. By the 1930s, there were 1,000 Boots stores spread around the country.
In July last year, the firm merged with Alliance Unichem to form a global giant with 2,600 shops in Britain and 400 outside the UK.
Martin Slaney, from GFT Global Markets, the online trading company, said the bid had come "out of the blue".
The private equity industry has come under the spotlight in recent weeks from the GMB union which has spearheaded an aggressive campaign.
Private equity firms have been criticised for unfairly benefitting from tax loopholes, cutting too many jobs and hiding behind a veil of secrecy.
This week, the Treasury Select Committee joined the debate, saying it is planning to launch an inquiry into the industry.
At his monthly press conference recently, Tony Blair insisted: "Britain is one of the number one places in the world for private equity, and I think it is a market that brings a lot of benefits to our economy."
