Nearly all Britons know the Boots name. The company’s first shop opened in Nottingham in 1849, selling herbal remedies, and since then Boots stores have spread to almost every high street. The company has long been the market leader in Britain and more recently has become a big player in Europe. Its brands include No7 cosmetics and Soltan suncare. The Boots brand may be synonymous with high-street chemists in Britain, but many consumers will be unsure of where the first word in the name Alliance Boots comes from. In 1977 Stefano Pessina founded Alliance as a pharmaceutical wholesaler in Italy and, 20 years later, merged it with Unichem, another pharmaceutical wholesaler, which had been founded in London in 1938. Alliance Unichem then merged with Boots in 2006 to form Alliance Boots, and a year later KKR, the private-equity giant, acquired the group in an £11 billion deal, including debt of £9 billion. It was the first time a FTSE 100 company had been bought by private equity. Pessina said he wanted to turn Boots into a global brand and the task would be easier if the company was privately owned. It was a bold move. Commentators speculated that this might have been a deal too far for private equity, and the transaction, Europe’s biggest leveraged buyout, was completed just before the onset of the credit crunch and the recession. The results have been impressive, however, with revenue and profits growing each year since the deal. In 2010, revenue grew to £22.5 billion (including £3.8 billion from associates and joint ventures) and trading profit exceeded £1 billion for the first time, although it still carries debt of £8.4 billion. The health-and-beauty businesses have 3,250 pharmacies and shops across 10 countries, while the pharmaceutical wholesale business supplies medicines and other healthcare products to more than 150,000 pharmacies and health centres in 16 countries. Andy Hornby, formerly chief executive at HBOS, now leads the business from the group’s headquarters in Switzerland. Pessina is the company’s chairman. The two men are focused on building Boots’s brands into big global names in their own right, and alliances with companies such as Procter & Gamble are being forged to help with this. Waitrose recently started running test sales of Boots products in some of its supermarkets. In turn, Waitrose foods are being sold in some Boots stores. The group has a higher turnover than all but the top 10 FTSE 100 companies, but a return to the stock market in the near future has been ruled out, with Pessina saying that the companymay need five or six years to further reduce debt and continue to grow earnings before a flotation can be considered.
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