Opinion: Why Alliance gave Boots the limelight

News of the planned merger between Alliance Unichem and Boots was leaked prematurely in last Saturday’s Financial Times, but that does not explain the different approaches to PR adopted by two sides of the biggest retail merger attempted in this country.

Finsbury, acting for Boots, was on the front foot stressing the cost savings from the merger, the overseas platform for expansion and the logic of combining two of the three biggest pharmacy chains in the UK. Alliance Unichem was nowhere to be seen or heard. This is odd: Boots is the giant in reputation, longevity, brand name and customer impact, while most people would never have believed Alliance was big enough to be a merger candidate. It ought to be Alliance doing the spinning, not Boots.

The reason might be that almost a third of Alliance's shares are controlled by CEO Stefano Pessina, so if he says the deal is going to happen then realistically no one has the strength to stop him. Boots in contrast has no large blocks of shareholders, so a majority has to be won over.

That said, a merger of this type normally see both sides banging on about cost savings from the beginning. This is because once a company announces a merger, it effectively puts a price on itself and becomes vulnerable to a counter-bidder willing to pay a little more. The trick is to promise cost savings and enhanced profits of such size that the shares of the merging firms soar out of reach of potential third-party predators.  

But the real mystery remains the dog that does not bark.  Alliance has left all the running to Boots.  This creates the impression that Boots is working to conceal its vulnerability while Alliance is silent because it knows it has got a steal. It is a good example of where if the story is good enough, you can wait for people to find out.

anthony.hilton@haynet.com

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