Stefano Pessina is a key figure in the Boots bid

The chemist rejected a �9.7bn ($18.7bn) offer from US firm Kohlberg Kravis Roberts (KKR), backed by Boots' own deputy chairman, Stefano Pessina.

But analysts are confident that the bidders will raise their initial offer, equivalent to �10 per share.

In a separate deal, KKR is buying US retailer Dollar General for $7.3bn.

Second attempt?

Alliance Boots' shares have risen more than 20% since KKR expressed its interest in the firm, the product of a �7.8bn merger last year.

Its shares rose a further 2.1%, or 21 pence, to 1017.5p in Tuesday trading.

Hopes are that the offer will be raised higher Claire Collingwood, CMC Markets See Alliance Boots shares

Alliance Boots said KKR's offer did not reflect the value of the UK chemist and drugs wholesaler, which operates 2,600 Boots stores in the UK.

But experts believe KKR and Mr Pessina, a key figure in last year's merger and a 15% shareholder in the firm, will return with a higher bid imminently.

"Hopes are that the offer will be raised higher," said Claire Collingwood, from CMC Markets.

Trade unions have warned that selling the group to a private equity firm could lead to "asset-stripping".

Since its tie-up with Alliance UniChem last year, the firm is a major drugs wholesaler with a 40% market share, supplying more than 125,000 pharmacies, health centres and hospitals.

KKR is the world's biggest private equity firm and was recently part of a consortium involved in the $45bn (�22.9bn) buyout of US utility TXU Energy.