LONDON (Reuters) - The buyers of health and beauty group Alliance Boots AB.L have offered the Boots pension fund around 240 million pounds plus a safety package worth 600 million pounds, sources close to the matter said.
The offer from Kohlberg Kravis Roberts and Alliance Boots Deputy Chairman Stefano Pessina, whose 11.1 billion-pound offer was voted through on Thursday, would provide the retirement scheme with 600 million pounds in cash in the event that the firm gets into financial difficulty in future, in addition to the upfront injection, one of the sources told Reuters.
Boots’ pension fund showed a surplus of 20 million pounds last year but the trustees have estimated the size of the scheme’s deficit on a self-sufficiency basis -- a measure that assumes no further contributions -- to be around 1 billion pounds.
“We’ve seen for the first time how much is on offer,” independent pension consultant John Ralfe, a former head of corporate finance at Boots, told Reuters.
“The cash amount of 240 million pounds is not enough. We need to see what the precise details of the 600 million pounds are.”
On Thursday John Watson, the head of Alliance Boots AB.L pension trustees, strongly criticised the firm for agreeing to Europe’s largest-ever private equity buyout before a deal is reached on pension provision.
However, at the same meeting the firm’s chairman Nigel Rudd said that Boots’ pension fund was “one of the best run and best funded in the FTSE” and that he had “assurances” from KKR and Pessina that would continue.
KKR is taking on 8 billion pounds of debt to fund the buyout of one of Britain’s best-known companies, which has already been condemned by unions and some politicians amid fears of asset-stripping by private equity “barbarians”.
Boots pension scheme trustees were not immediately available for comment. KKR declined to comment.