Boots pension trustees win £1bn pledge from KKR(2)

Alliance Boots pension scheme trustees have reached a settlement from Kohlberg Kravis Roberts which secures the scheme for the next ten years. The agreement comes two days before the trustees reportedly planned to challenge KKR’s accepted takeover bid.

US buyout firm Kohlberg Kravis Roberts has accepted a settlement worth £1 billion (€1.5 billion, $1.3 billion) securing the chemist Alliance Boots’ pension scheme for the next ten years and paving the way for the shareholder-approved deal.

The buyout firm has promised £418 million in cash instalments over the next decade and a £600 million security agreement. KKR has also guaranteed the scheme’s solvency using an unnamed bank.

The trustees want additional security because of the £8 billion leverage used for the deal.  Reportedly KKR offered the trustees £900 million earlier this month.

The agreement comes two days before lawyers to the trustees were to contest the takeover at a court hearing, according to UK newspaper The Times.

KKR has been in protracted discussions with the trustees since it had its £11 billion bid accepted for the company in late April and especially since it went on to secure shareholder acceptance of the bid in late May.

The firm looks set to complete the deal after agreeing a pension settlement with the trustees who had been publicly opposed to the pension provisions initially provided by the buyout firm.