Bid target Alliance Boots in $65 million takeover

Drugs retailer and distributor Alliance Boots Plc announced a rise in fourth-quarter sales, 300 job cuts and a $65-million rebranding as it seeks to fend off a possible takeover bid.

The British-based firm, created from the merger of health and beauty retailer Boots and drugs wholesaler Alliance Unichem last year, rejected a £9.7 billion bid proposal earlier this month from its deputy chairman, Stefano Pessina, and private equity firm Kohlberg Kravis Roberts.

Chief Executive Officer Richard Baker declined to comment on the bid approach, but said plans to introduce the 150-year-old Boots brand to around 900 community pharmacies acquired from Alliance Unichem underscored the potential for the merged business. Not all analysts were impressed, however. "The detailed year-end close period announcement for the year to March 2007 that was announced this morning was not exactly a robust bid defence," said WestLB's Peter Brockwell, cutting his rating on Alliance Boots shares to 'hold' from 'add'.

At 1440 GMT the shares were down 0.4 per cent at 1,016-1/2 pence.

Sources close to the matter told Reuters on Sunday that private equity group Terra Firma was considering a bid for Alliance Boots.