From the start, there has been something absurd, even distasteful about the Stefano Pessina/KKR bid for Alliance Boots.

New readers, begin here: Mr Pessina holds a 15 per cent stake in the business, where he serves in an executive role as the deputy chairman. Frustrated by the market’s attitude to the company in the seven months since the merger of Alliance UniChem and Boots, he has teamed up with KKR, the private equity company, to buy the business. They made one offer of £10 a share. It was rejected summarily by the board. Yesterday, they increased the bid to £10.40, which means a total for the company, including debt, of £11.4 billion. Sir Nigel Rudd, the Alliance Boots chairman, agreed to open up the company’s books for due diligence, an act that usually presages a deal.

Shareholders have every right to feel badly treated. Wasn’t it Mr Pessina who sold them on the merits of the merger less than a year ago? Wasn’t it Mr Pessina who, as a leading executive of the company, was responsible for setting a strategy that would maximise value for all shareholders, not just himself?

Mr Pessina’s fellow board members at Alliance Boots also have good reason to feel compromised. They did the respectable and inevitable thing, when they rejected his initial bid. But it always seemed clear that the company would ultimately have to open its books. What else were they going to do — reject the bid and return to work on Monday morning as if nothing had happened? (The unappetising alternative for Sir Nigel was to follow the path trodden by Sir Dominic Cadbury at Misys, who had to take up the reins of the business after a bid by Kevin Lomax, the founder and chief executive, fell through.)

The tie-up between Mr Pessina and KKR also means that it has been very hard for Sir Nigel to drum up a rival bid. Which other private equity firm is going to make an offer knowing that KKR has locked up Mr Pessina’s substantial and strategic stake?

The suspicion that Boots’ board had no choice but to do a deal with Mr Pessina and KKR was only reinforced yesterday by the very modest increase in its bid. They raised their offer by 4 per cent.

To be fair, Mr Pessina’s frustration at the public market’s valuation of Alliance Boots is understandable. KKR’s argument that the company’s growth can be better achieved in private hands is credible. And their bid is handsome: the £10.40 offer is at a 30 per cent premium to where the company has been trading in the past six months. This company was worth £6 billion when talks on the merger began 18 months ago. It is now worth more than £10 billion.

So, some investors may begrudge the circumstances of the offer, but they are not likely to argue with the money on the table. As things stood last night, private equity looked set to acquire its first FTSE 100 company.

This is a milestone in British capitalism. It means that more big public-to-private deals will follow. It means that private equity will be subject to scrutiny from consumer groups, unions, political parties and the media. Mr Pessina’s reward for stepping out of the limelight of the public markets is likely to be a new level of exposure.

Scramble for dominance

This week has seen a lot of talk about airline consolidation: British Airways’ interest in bmi emerged; then Sir Richard Branson’s Virgin Atlantic made clear that, as and when bmi’s Sir Michael Bishop finally decides to sell, they would be buyers; Texas Pacific Group bid for Iberia, the Spanish airline; BA has appointed bankers to help to decide whether to sell its stake or bid for the whole company; meanwhile, Alitalia is still looking for a buyer and questions linger over Aer Lingus now that the Ryanair bid has been quashed.

What’s going on? To understand what is happening in the airspace above, it is worth thinking about what has happened on the high street below. An increasingly price-conscious consumer, hungry for the best value, highest quality and newest products has forced retailers to embrace the economic logic of scale. The greengrocers, newsagents and specialist vendors have not been able to sustsain competition from the supermarkets that stock more products at lower prices. As the old rules that once protected the national airlines continue to be stripped away, the same forces are at work at airports.

Europe has too many airlines. Nearly every country has its own flag carrier and many have a couple of rival airlines too. It is a continent like the US and, although fragmented by nationality, it is not that different in terms of air travel. A handful of airlines will prosper and be able to afford new aircraft. So, there is the aerospace equivalent of a landgrab — a race to buy up airlines and landing slots. In the end, only the supermarkets of the sky will survive.

Criminal policy

The TK Maxx credit card heist is not only worrying for the 455,000 people who are the potential victims of hackers; it is an alarm call for retailers generally.

In an electronic age, people used to worry that the banks would not be responsible guardians of personal and financial information. In fact, online security has become a matter of competitive advantage for financial institutions. As a result, credit card companies and high street banks have recruited ever more perceptive technologies to track wayward and unusual payments. Buy a computer on impulse, stop for lunch in Istanbul, make a flight booking in another person’s name and the bank will, most likely, stop and check the transaction with the customer.

This points to the chief failing of TJX, the US parent company of TK Maxx, in this case. While the company insists that it moved carefully and deliberately and on the advice of the agencies of US law enforcement, the fact is that its communication with the general public has been, at best, staggered. The company has finally made all the information clear, but in a filing to the US Securities and Exchange Commission.

By failing to engage with the people affected as openly as possible, TJX has lost the confidence of consumers. It has failed to engage with the people most likely to be able to stop credit card fraud: the credit card users themselves. Retailers everywhere will be shaken by the intrusion at TK Maxx. The lesson for high street operators is not only to keep upgrading surveillance of their own electronic security, but to harness the self-interest of the customer.

Labour shouldn’t be surprised if its latest try at a sop to restive Scottish voters leaves them “black affronted”. It may have seemed cunning to unveil a big order for kilts for Scotland’s Royal Regiment ahead of the polls north of the Border. But it is none too smart that the regiment’s sporrans will be made by Brummies and its trews in Leeds. The SNP will be toasting this deal with a wee dram or three.

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