The board of Alliance Boots is today set to recommend an offer of as much as £10.70 a share from Stefano Pessina and Kohlberg Kravis Roberts (KKR), the private equity firm, in a move that may spark a bidding war with a rival consortium led by Terra Firma.

It is understood that KKR and Mr Pessina, who is Boots’s executive deputy chairman, were last night considering increasing their offer to as much as 30p above their £10.40-a-share approach. The price would well exceed Boots’s closing share price of £10.49½ and value the bid at about £10.35 billion.

The consortium was working hard to close a deal by today’s deadline, set by Sir Nigel Rudd, the Boots chairman. However, sources said that announcement of an agreed deal might slip to the weekend.

KKR and Mr Pessina, who is Boots’s biggest shareholder with a 15 per cent stake, first approached Boots in March with a buyout proposal that valued the health and beauty group at £10 a share. That was rejected and the suitors came back with a £10.40 indicative bid on March 30.

A deal would see Mr Pessina invest up to £1 billion of his own money in what would be Europe’s biggest leveraged buyout. It would also be Europe’s largest private equity buyout.

A recommendation by the Boots board would push the rival consortium, led by Terra Firma, Guy Hands’s private equity firm, to complete its due diligence, agree financing and make an offer. The board is under pressure to show its independence, given that Mr Pessina and his partner, Ornella Barra, are directors.

However, it will be hard for Mr Hands and his bid partner, the Wellcome Trust, to win without Mr Pessina’s support. Private equity deals typically require backing by 75 per cent of shareholders to secure financing. Mr Pessina’s stake means it would take only another 10 per cent of shareholders voting against the deal for it to fail.

In a similar situation, the opposition of Lord Sainsbury of Turville and his family, holding about 18 per cent of J Sainsbury stock, thwarted a CVC-led bid for the grocer this month.

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