Pensions worry hangs over Boots bid

The group set to buy health and beauty giant Alliance Boots is understood to be at loggerheads with the firm’s pension trustees after offering far less than the £400m (€587m) demanded upfront, according to a newspaper report today.

US private equity house Kohlberg Kravis Roberts and Boots deputy chairman Stefano Pessina are believed to have put forward plans to pay just £50m (€73m) upfront to plug the retail and pharmaceutical giant’s pension deficit.

Boots pension trustees are said to be demanding £400m (€587m) paid in cash immediately, with additional payments potentially totalling up to £1bn (€1.5bn).

The buying team said in the scheme of arrangement outlining details of the deal this week that it “recognises the importance of ensuring that the Alliance Boots Pensions Schemes are prudently funded and is working to reach agreement with the trustees on the appropriate levels of funding for these schemes, including by way of additional contributions”.

But the dispute could threaten the £11.1bn (€16.3bn) deal’s success, with pensions issues increasingly taking centre stage in mergers and acquisitions.