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Surprise all-clear for Boots/Alliance merger

By Emma Thelwell Mar 03, 2006

Emma Thelwell

If the truth be known, the Office of Fair Trading’s (OFT) decision to give the merger of Boots and Alliance UniChem the all-clear surprised everyone, including the Boots board, says Jeremy Warner in The Independent.

And so it should: the OFT have just waved through a £7.3bn deal that will create the biggest chemists’ chain in Britain – it will have sales of £13bn and account for 19% of the pharmacy market.

What a “sideswipe at the Government’s anti-competitive practices”, says Patience Wheatcroft in The Times. The two firms were expecting a temporary block on their tie-up, and many predicted a full-blown OFT inquiry. The merger, not expected until well into 2007, could now be completed by June.

That leaves little time for a private-equity player to materialise, but Boots’s strong cash flow and potential to build its business should attract a bidder, says Wheatcroft. The share price for both firms rose slightly on the news, and investors are likely to vote in favour of the merger. Warner is not so sure this “hurriedly assembled” deal is a wise move for Boots, but in the absence of any “attractive alternative, it will just have to do”.

Published in News-And-Charts | More articles by Emma Thelwell

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