Shock, Horror, Eh?

In this way, British money – whether from customers or taxpayers – was siphoned offshore. The KKR funds that owned Alliance Boots were housed in the tax haven of the Cayman Islands, while the stakes held by Pessina were located in Luxembourg. A few months after going private, Alliance Boots shifted its headquarters from Nottingham to the low-tax canton of Zug in Switzerland.

Foreigners invest money in Britain. The bastards.

If Nottinghamshire heritage could be junked in the new regime, financial stability didn’t count for much, either. Before the takeover, Boots UK bore a modest 50p-worth of loans for every £1 of equity, or net assets. Immediately after the takeover, that ratio shot up five-fold. It was as if a house worth only £100,000 suddenly had a giant mortgage of £250,000.

Err, no, that is to confuse accounting equity with the value of the company. But then when you’ve a modern history graduate doing your economics pieces this sort of thing will happen. The company was worth the £11 billion they’ve just paid for it, not the equity that’s in the accounts.

4 thoughts on “Shock, Horror, Eh?”

  1. Something interesting I heard on the radio last week is in respect of a disadvantage of buying a firm and being subject to Swiss jurisdiction. The “goodwill payment” (i.e. the surprice on what the company should really be worth) to close the deal is counted as part of the value of the company (and thus as part of the taxable wealth of the shareholders), whereas in Anglo countries (and France) it can be written off. The French even have a word for it (prix de cloture or something).

  2. Alliance Healthcare went private because Stefano Pessina was pissed off at Brown’s ludicrous quarterly reporting requirements for PLCS.

  3. My lack of knowledge about the differences between British chemists and American Pharmacies limits any opinion I have.

    The most obvious question is, if Tony feels that he could provide better customer care what is preventing him from starting a competitor that fill the need he perceives?

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