UK – Retailer Boots has confirmed that pension discussions are underway ahead of its proposed £7bn (€10.3bn) merger with Alliance UniChem.

More than 25,000 members of the two firm’s pension schemes stand to be affected by decisions relating to Boots’ €4bn fund and UniChem’s €43m scheme.

“The pensions are part of the detail to be worked out,” said Boots spokesperson Donal McCabe.

“Both funds are in relatively good health. They have a small deficit and are well run. We are talking to the Boots trustees, but there is no definitive statement to be made yet,” he told IPE.

Boots is famous in the pensions industry in the UK for moving its entire portfolio into bonds - though it has since moved away from that decision.

McCabe was unable to comment on whether the schemes will remain separate or be combined. However, sources at Boots suggested the funds would remain separate for now.

Hewitt Associates advises both firms and a spokesman there declined to comment.

According to ‘Pension Funds and their Advisers’, Deutsche Asset Management is the investment manager at Alliance Unichem. HSBC is custodian at Boots.

Any merger would involve 3,000 pharmacy stores and £13bn in sales.

According to reports, the Alliance UniChem board approved the deal on Saturday and Boots finalised merger details on Sunday.

Following Boots’ sale of its Boots Healthcare International arm (for between £1.7bn and £1.8bn), the new Alliance Boots will have a retail pharmaceutical market share of approximately 17%.

Competition concerns, shareholder approval and rival bids may yet derail the merger – which will be cemented next year if all goes according to plan. Total costs of the merger will be an estimated £100m, say reports.

According to reports, Goldman Sachs is advisor to Boots, while Credit Suisse First Boston and Merrill Lynch are advising Alliance UniChem.