KKR’s Boots increases holding in Turkish pharma business

As well as Hedef’s presence in Turkey, the company has a controlling 50 per cent stake in Egypt’s United Company of Pharmacists and an associate interest in Hydrapharm, the largest wholesaler in Algeria.

Hedef Alliance has consolidated revenue of around £2.4bn (€2.86bn) - of which £1.9bn (€2.27bn) is in Turkey and £500m (€596.7m) in Egypt - operates over 130 distribution centres and has more than 8,500 employees.

Alliance Boots, or Boots as it is commonly known on UK high streets, was subject to one of Europe’s highest profile private equity deals at the height of the boom in 2007.

KKR, now listed on the New York Stock Exchange, paid £11bn (€13.13bn) for the then FTSE 100 pharmacy-led health and beauty group, in the biggest leveraged buy-out on record on the continent.

Alliance Boots had accepted an offer to be bought by KKR for £10.6bn, but saw competition from Guy Hands’ Terra Firma, Wellcome Trust and HBOS. The pharmaceuticals player then accepted a revised, £11bn offer from KKR.

The pharmaceuticals player operates more than 3,250 health and beauty retail stores in nine countries, of which just under 3,150 have a pharmacy.

The group reported revenue of £18.7bn (€22.31bn) for the year ended 31 March 2010, and earnings before interest, taxes, depreciation and amortisation of £1.2bn (€1.43bn), up 9.5 per cent.

As well as an increase in profits, Alliance Boots defied critics of the leveraged dealmaking market by saying earlier this year that it had slashed a third of its £9bn (€10.73bn) debt pile, a cut attributed to a fall in interest rates.  

The KKR-Boots deal remains Europe’s largest private equity buy-out and will do so unless banks are prepared to return to the heavily leveraged transactions that typified the industry before the credit crunch choked it.

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