KKRs Acquisition of Alliance Boots Case Study Example | Topics and Well Written Essays - 1000 words

KKRs Acquisition of adherence Boots - Case Study ExampleBesides the case which would be obtainn up for discussions, it is necessary to take up the case of KKRs purchase of RJR Nabisco, a food products manufacturing company. After the announcement of the deal being successful, RJRs stock outlay shot up from $ 55 to $ 77.25, a spectacular derail by any standards (Brigham & Ehrhardt, P.1000).During early times, the guiding principles for putsch were in terms of restructuring fully veritable companies, acquiring them, and later on, disposing them at good margins, when they are able to provide profitable business. How ever so, nowadays - these considerations are not taken into account, and what is merely important is the takeover of a larger company, preferably by a private equity, in order to utilize its assets for payment of creditors of the acquiring company.The method of experiencing acquisitions with LBO is widespread, and has given rise to private equity being termed as people who wish to liquidate the Companys production capacity, in order to pay off the post taken debts and obligations. confederacy Boots is being seen as the first FTSE Company to be acquired by private equity company, KKR, although earlier the latter had also acquired AFR Nabisco, a prominent food products manufacturer. On March 12, 2007, Alliance Boots was contacted by New York based private equality mogul, Kohlberg Kravis Roberts & Co., (KKR) for levered buyouts (LBO) for a record sum of 11 Billion. It is seen as the biggest European LBO deal ever struck and the underwriters even agreed to lengthen the period for Investor to stake claims in it. This move could be seen in terms of KKRs recent acquisition of the UK Retail chain, Alliance Boots, which was undertaken in conformity with the largest shareholder, Stephan Pessina on the condition that Mr. Pessina would just assume control in the newly acquired company. Modus operandi of LBOThe mode of acquisition would be in terms of identif ying companies, which had utmost cash flows, but lacked suitable avenues for investments. Through loans, these commercial debts would purchase majority interests in firms at higher than market rates. After this, the acquired company would have to take over the liabilities of the acquiring company, or the acquiring company would take loans by pledging the acquired companys assets etc. as security. Thus, it was possible to gain entry into very large corporations through the use of acquisition techniques. Over the years, it is seen that acquisitions now cease to have real value, since any company, however large, could be