Alliance Boots GmbH completed its two-part sale to Walgreen Co. last week, putting buyout firm KKR & Co. on track to roughly quadruple the cash it invested in the European pharmacy giant.
All told, the sale to Walgreen has put about $7.3 billion in cash and stock in KKR’s pocket, according to a person familiar with the matter. The private-equity firm invested about $1.9 billion when it and other investors, including Alliance Boots executive chairman Stefano Pessina, took the company private in 2007 in the largest-ever European buyout.
A big reason for the huge haul: KKR and its co-investors accepted stock as part of the purchase price when Walgreen agreed to acquire Alliance Boots in 2012 in a two-part transaction. Walgreen shares have more than doubled since the takeover was agreed upon that June, adding more than $10 billion to their return.
Walgreen on Wednesday completed the second phase of the transaction, acquiring the 55 percent of Alliance Boots that it didn’t buy in 2012. Walgreen, the largest U.S. pharmacy chain by stores, also changed its name to Walgreens Boots Alliance Inc., and its stock symbol to WBA from WAG.
The combination creates a pharmacy empire with more than 12,800 locations in 11 countries and a vast drug distribution business. It becomes the largest purchaser of prescription drugs globally, which should boost its leverage in negotiations with drug suppliers. The merger’s completion brings KKR closer to capping one of the megadeals it led during the buyout boom that preceded the financial crisis.
In all, the Alliance Boots sellers’ take was worth $27.3 billion as of Wednesday. At the time the two-part deal was announced, Alliance Boots was valued at $16.2 billion.
