Private equity firm KKR banks $2bn from sale of Alliance Boots stake

US private equity firm Kohlberg Kravis Roberts & Co LP (NYSE:KKR) said on Tuesday it would receive USD2bn (EUR1.6bn) in cash and stock from the sale of its stake in Swiss pharmacy-led health and beauty group Alliance Boots GmbH to US drugstore chain operator Walgreen Co (NYSE:WAG).

Walgreen announced earlier today it would invest an initial USD6.7bn in cash and stock to buy a 45% stake in Alliance Boots under a strategic partnership deal, with an option to buy the rest after a three year period.

KKR, which invested USD2.45bn in Alliance Boots in 2007 alongside the health and beauty retailer’s executive chairman Stefano Pessina, said it would get USD1.8 bn in cash and seven million Walgreen common shares, worth USD200m at current prices, from the disposal.

Under the terms of the deal, Dominic Murphy of KKR will join the Walgreen board together with Pessina, the buyout group said.

Separately, Walgreen said it would pay a total of USD4bn in cash and 83.4m of its shares for the initial Alliance Boots stake. It plans to use existing cash and new debt to finance the cash part of the price and expects to wrap up this deal by 1 September 2012, pending regulatory approvals.

The partnership is seen to create the world’s top pharmacy-led, health and wellbeing retailer with 11,000 stores across 12 countries, the largest global pharmaceutical wholesale and distribution network comprising more than 370 distribution centres serving pharmacies, doctors, health centres and hospitals in 21 countries, as well as the largest purchaser of prescription drugs.

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