Shareholders in UK health and beauty group Alliance Boots have given their overwhelming backing to an £11.1 billion buyout bid led by Kohlberg Kravis Roberts, which is set to become Europe’s largest private equity deal to date.
At a meeting in London today, the vast majority of Boots shareholders voted to accept KKR’s £11.39 per share offer. In total, 96.3 percent of votes cast were in favour of the deal, well above the 75 percent threshold required for the bid to succeed.
As a result of the vote, Alliance Boots shares will now de-list from the London Stock Exchange on June 28. It will be the first company in the FTSE 100 – an index of the biggest listed companies in the UK – to come under private equity control, and the biggest European buyout on record.
KKR, which is bidding in conjunction with Boots deputy chairman Stefano Pessina, was forced to raise its offer after buyout firm Terra Firma emerged as a rival suitor. The final bid represented a premium of more than 40 percent to the Alliance Boots share price on the day before the firm’s interest was revealed.
The show of support comes despite ongoing wrangles about the company’s pension fund deficit. Trustees of the fund have been demanding a payment of about £400 million to plug the deficit, with reports suggesting that KKR has offered just £50 million.
At today’s shareholder vote, John Watson, chairman of the company’s pension scheme, reportedly attacked the company’s board for recommending the offer before the issue had been resolved, while some small shareholders also expressed concerns.
The GMB trade union has also registered its discontent, demanding that the pensions regulator should intervene in the dispute. The union said it would publish a report on Sunday that will show links between private equity industry and insolvent pension funds. Spokesman Paul Maloney said: “The private equity industry has ‘form’ when it comes to links to insolvent pension funds.”
The union suggested more drastic action is also required. Maloney said: “The Secretary of State for Work and Pensions must also intervene to ensure that all legal powers are used to protect members of the fund from the piranhas of private equity.”