US private equity group KKR was Tuesday poised to seize control of British pharmacy giant Alliance Boots, with a 22-billion-dollar bid that would be Europe's largest private-equity takeover.
Kohlberg Kravis Roberts emerged as winner on Tuesday after battling against a rival consortium led by British private equity group Terra Firma to buy Alliance Boots, Europe's biggest pharmacy chain.
KKR raised its cash offer by 4.5 percent to 11.0 billion pounds (16.2 billion euros), which the board of Alliance Boots then recommended to shareholders and led Terra Firma to drop out.
Terra Firma, whose consortium also included medical charity Wellcome Trust and British bank HBOS, said it had "decided to withdraw its potential interest in acquiring Alliance Boots."
A takeover by KKR, providing it is accepted by Alliance Boots shareholders, would represent Europe's biggest buyout by a private equity firm.
KKR has been joined in its bid by the executive deputy chairman of Alliance Boots, Stefano Pessina -- who holds 15.05 percent of the pharmacy group.
A buyout would also make Alliance Boots the first company to fall into private hands while being listed on London's prestigious FTSE 100 share index.
Alliance Boots was created last year by the British merger of pharmacy chain Alliance UniChem and health and beauty retailer Boots.
The cross-Atlantic bidding war for the group erupted on Friday, as the rival private equity groups each launched cash bids approaching 11.0 billion pounds.
Alliance Boots on Friday accepted KKR's bid of 10.6 billion pounds, but then received a higher bid from Terra Firma worth 10.78 billion pounds.
KKR had had two previous bids for Alliance Boots, worth 1,040 and 1,000 pence per share, turned down by Alliance Boots management in March.
Since it was founded almost 31 years ago, KKR has completed about 150 transactions with a total value of more than 274 billion dollars.
Earlier this year it led a consortium that agreed to buy Texas utility TXU for a massive 45 billion dollars.
The price of shares in Alliance Boots fell on Tuesday on news that the bidding war had ended.
At the close of London trade, Alliance Boots was down 0.49 percent at 1,121.00 pence on the capital's FTSE 100 leading share index. KKR's new offer was priced at 1,139 pence per Alliance Boots share.
The KKR consortium said Tuesday that it owns 29.3 percent of Alliance Boots after purchasing shares in recent days.
In its withdrawal statement Tuesday, the Terra-led rival said it was "naturally disappointed" by the outcome.
"However, we are pleased that the shareholders of Alliance Boots have received a significantly higher price due to our interests, and we wish the company and all its stakeholders well under new ownership," it added.
The private equity sector consists mainly of investment funds or banks that buy stakes in non-listed companies that are then generally broken up and sold for a profit.
Private equity groups also target listed companies that are then withdrawn from the stock market.
Some leading finance officials have warned of the risk associated with private equity groups that borrow huge amounts of money through the company being acquired to help fund the deals.
Trade unions, meanwhile, claim that workers face increased risks of redundancy.
Alliance Boots has 2,600 healthcare outlets, which include 1,500 community pharmacies. The combined group has more than 100,000 employees.
Internationally, Alliance Boots operates around 550 pharmacies in Ireland, Italy, the Netherlands, Norway, Russia, Switzerland and Thailand.
Alliance Boots is currently undergoing a three-year restructuring programme costing 250 million pounds that will also result in 2,250 jobs being axed.
