MERGER OF BOOTS PLC AND ALLIANCE-UNICHEM PLC

Merger of Boots plc and Alliance-Unichem plc

Merger of Boots plc and Alliance-Unichem plc

Introduction

Boots Group plc is a leading UK health and beauty retailer with 1,423 stores across the UK (1,350 of which contain a pharmacy). It also has an opticians business and was active in the manufacture of certain pharmaceutical products - including Nurofen, Strepsils and Clearasil - through its Boots Healthcare International ('BHI') business. On 31 January 2006 Boots sold BHI to Reckitt Benckiser (the BHI transaction). Following the sale of BHI, Boots retains some manufacturing capability, in particular in contract manufacture of 'specials' pharmaceutical products1 and beauty and personal care products.

Alliance UniChem Plc (UniChem) is an international pharmaceutical distribution company. In the UK it is engaged in pharmaceutical wholesaling and retail pharmacy with a chain of 958 pharmacies (currently trading under the name Moss but being rebranded Alliance Pharmacy). Its UK turnover for the year ended 31 December 2004 was [more than £70 million]. (Associated Press, 2005)

The acquisition is to be implemented either by way of a public offer or a scheme of arrangement, pre-conditional on receipt of applicable competition clearances. It is a share-for-share transaction which will result in existing Boots shareholders holding 50.2 per cent of the merged entity with UniChem's shareholders holding the remaining 49.8 per cent.

The transaction meets the thresholds for notification to the European Commission (the Commission) under the EC Merger Regulation (ECMR). Following a request by the parties, the Commission decided to transfer the transaction to the UK under Article 4(4) of the ECMR on 30 November 2005. (MarketWatch, 2005)

As a result of this transaction Boots and UniChem will cease to be distinct. The UK turnover of UniChem exceeds £70 million, so the turnover test in section 23(1) (b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation. The 45 day statutory deadline for consideration of this case expires 9 February 2006. The administrative deadline expired on 30 January 2006.

In 2009/10 the Group has again reported strong growth in revenue, EBITDA and trading profit, while at the same time benefiting from historically low interest rates. This, together with tight management of working capital, has resulted in a robust cash flow. Alliance Boots continue to invest in developing our pharmacy-led health and beauty customer offering and expanding the scope of our pharmaceutical wholesaling activities, all of which is focused on driving future growth.

Corporate development

Alliance Boots continue to progress opportunities to enter new geographical markets and to expand our presence in existing markets through acquisition. During 2009/10 Alliance Boots successfully merged Boots Opticians with Dollond & Aitchison, creating the second largest optical chain in the UK. The integration of the two businesses is progressing well, building on the strength of the Boots brand. Our product brand strategy is now evolving at a ...