Kohlberg Kravis Roberts has announced that Walgreen Co., the largest drug store chain in the US, and Alliance Boots, a leading international pharmacy-led health and beauty group and a KKR portfolio company, have agreed to form a strategic partnership to create the first global pharmacy-led, health and wellbeing enterprise. Under the terms of the agreement announced today, Walgreens will acquire a 45% equity stake in Alliance Boots.
KKR will receive $1.8 billion in cash and seven million Walgreens shares of common stock equivalent to $200 million at the Walgreens closing share price of $31.96 on June 18, 2012 for the 45% stake. Walgreens has the option, but not the obligation, to acquire the remaining 55% equity interest in Alliance Boots during the six-month period beginning two and a half years after the initial closing.
“In 2007, we made a commitment to accelerate the development of Alliance Boots. Following five years of successful performance, both in the UK and overseas, the company is now in a better position than ever before. The partnership announced today is about building upon that success and laying the foundation for future growth,” said Dominic Murphy, Member of KKR, who leads KKR’s activities in The United Kingdom and Ireland.
In 2007, KKR invested $2.45 billion in Alliance Boots, consisting of approximately $1.4 billion from the KKR 2006 Fund, approximately $750 million from its European Fund II and approximately $300 million from KKR’s balance sheet.
KKR made its investment in Alliance Boots in partnership with Stefano Pessina, Executive Chairman of Alliance Boots. Since then, Alliance Boots has delivered strong growth, building a presence in more than 25 countries and employing over 116,000 people. Alliance Boots’ pharmacy-led health and beauty retail businesses now operate more than 3,330 health and beauty retail stores in 11 countries and its pharmaceutical wholesale businesses supply medicines, other healthcare products and related services to more than 170,000 pharmacies, doctors, health centers and hospitals in 21 countries.
“Over these last five years, KKR has been a strong, supportive, entrepreneurial partner to Alliance Boots. KKR has constantly been committed to helping the Alliance Boots’ leadership team to grow the company and to create sustainable value in the long term. Our joint focus is now on forging with Walgreens the world’s first global pharmacy-led health and wellbeing enterprise,” said Stefano Pessina, Executive Chairman of Alliance Boots.
KKR makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East. The firm has $62 billion in assets under management. In addition to its New York headquarters the firm has offices in Menlo Park, San Francisco, Houston, Washington DC, London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney (www.kkr.com).