Alliance Boots’s pension trustees reached a £1 billion settlement with Kohlberg Kravis Roberts (KKR) yesterday after a climbdown by the American private equity firm.

The last-minute deal clears the way for AB Acquisitions, the buyout vehicle of KKR and its partner Stefano Pessina, the deputy chairman of Alliance Boots, to finalise their £11.1 billion takeover of the company at a court hearing tomorrow.

AB Acquisitions agreed put £418 million in cash into the pension fund over the next ten years.

That is about £78 million more than originally offered and is in addition to a £600 million security package designed to protect the long-term benefits of the members if the company collapsed.

John Watson, chairman of the pension trustees, said: “We are pleased to have reached a satisfactory agreement on the future funding and security of the Boots pension scheme. All of our members will benefit from the agreement and I am delighted that this period of uncertainty has come to an end with this positive result.”

Analysts said that the large sum that KKR had been forced to pay into the Alliance Boots pension scheme, one of the most well-managed and funded in the FTSE, would have implications for other takeover bids.

ICI, which is facing a £7.2 billion takeover bid from Akzo Nobel, the Dutch chemicals company, has a £1 billion pension deficit and the fund’s trustees have already indicated a desire to be heavily involved in any takeover talks.

David Norgrove, chairman of the Pensions Regulator, is due to appear before a private meeting of the Work and Pensions Select Committee tomorrow. He will discuss whether the Regulator has sufficient power to force private equity bidders properly to fund pension schemes in takeovers of this type.

Mr Norgrove, who was involved in the Alliance Boots discussions, said that he believed that the regulator played a significant role in bringing the two sides to an agreement. “It is an important case because of its scale,” he said.

The agreement was reached late on Monday night after weeks of hard bargaining between the pension trustees and KKR, which at one point had planned to put only £50 million in cash into the scheme.

The private equity firm is thought to have backed down in the light of threats from the trustees to make representations at tomorrow’s court hearings, which could have delayed the takeover process for some weeks.

The issue was also taken up by politicians, who called on KKR to protect the company’s pensioners.

AB Acquisitions commented: “We are very pleased to have reached an agreement which will ensure that the Boots pension scheme will remain well-funded and that the long-term benefits of the scheme members will be safeguarded.”

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