KKR and Pessina take Boots into China

Alliance Boots is expanding into China less than a year after US buyout firm Kohlberg Kravis Roberts took the company private alongside Stefano Pessina - beginning the emerging markets expansion plans cherished by the Boots executive chairman.

Kohlberg Kravis Roberts portfolio company Alliance Boots has invested in a £41 million ($81.5 million; €55.1 million) joint venture in China with Guangzhou Pharmaceuticals Company, taking a 50 percent stake each in the newly formed company.

Boots' Chinese

Boots’ partner is the fourth largest pharmaceutical business in China with a circa 3 percent market share and it also has a 16 percent market share in its native Guangdong province. This region has a population of 80 million as well as having the fastest growing GDP per capita in the country. The company had revenues of £515 million during 2006 and it has around 2000 employees.

Stefano Pessina, Alliance Boots executive chairman, said in a statement the combination of Alliance Boots’ experience and its partner’s position would allow the company to benefit from the rapid expansion of the Chinese healthcare market and further consolidation opportunities.

KKR and Pessina bought Boots in May for £11.1 billion sealing the largest ever European leveraged buyout and it remains the only successful take-private from the London Stock Exchange’s index the FTSE 100.

Pessina said at the time of the acquisition, when he was Boots deputy chairman, that an advantage of being private would be the possibility to expand the business into emerging markets with fewer complications.