Terra Firma and Wellcome stalk KKR consortium
Terra Firma and Wellcome Trust are keen to team up with rival Alliance Boots bidder KKR and ally Stefano Pessina to take the retailer private.

The private equity firm and medical research charity are proposing a securitisation to help fund a deal, by issuing bonds against income from Alliance Boots' property. The portfolio is believed to be worth between£500 million and£1 billion.

Sources said a link-up between the bidders was being mooted, but it was unclear whether a consortium would be formed as Retail Week went to press.

Alliance Boots opened its books to Terra Firma and Wellcome this week. KKR and Alliance Boots deputy chairman Pessina had access already, after tabling a£10.40-a-share offer last month.

Terra Firma and Wellcome's interest in joining KKR has been prompted by the key role likely to be played by Pessina, whose backing analysts believe is key to the success of any bid. He controls a 15 per cent stake in Alliance Boots and has pledged loyalty to KKR.

Panmure Gordon analyst Christian Koefoed-Nielsen said: 'Pessina has built a team around him who are enthused by the current situation. You risk him saying 'to hell with it' and leaving. Who will deliver and justify borrowing the money then?'

Private equity interest in Alliance Boots has provoked trade union fury. The GMB, which represents 3,000 staff and has been waging a publicity war against private equity firms, called on the Government to block any takeover. It fears that Alliance Boots would be destabilised by debt and that the NHS could suffer as a result of medicine price-hikes and local pharmacy closures.

A KKR spokesman said: 'KKR and Mr Pessina will have made considerable equity investments in the company and will have no interest in putting that at risk.'

No comment was available from Terra Firma or Wellcome.