KKR (KKR) Becomes Real Winner in Alliance Boots/Walgreen (WAG) Deal

June 19, 2012 9:44 AM EDT
Seeing a little upside Tuesday morning from the gigantic Walgreen (NYSE: WAG)/Alliance Boots ("Boots") deal is investment firm Kohlberg Kravis Roberts & Co. L.P. (NYSE: KKR).

KKR issued a release in conjunction with the announcement highlighting its history with Boots. KKR said it invested £1.22 billion with Boots back in 2007 and said it will receive £1.2 billion in cash and about £0.14 billion of Walgreen stock with the current deal.

Walgreen is paying $6.7 (about £4.32 billion) for 45 percent of Boots and has an option to acquire the remaining 55 percent for $9.5 billion (about £6.13 billion) in cash and stock, plus the assumption of Alliance Boots then-outstanding debt. That option can be exercised "during the six-month period beginning two and a half years after the initial closing," according to the release.

With KKR receiving about £1.34 billion initially and the total transaction size valued at £10.45 billion, total return on its original investment might come out to be 2.44 times. Not bad for a five-year investment and a slumping economy.

Shares are up about 2.5 percent early. (Note: an exchange rate of $1.55 = £1.00 was used.)

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