SHAREHOLDER ALERT: Pomerantz Law Firm Announces the Filing of a Class Action Against Walgreen Co. and Certain Officers -- WAG...
April 14 2015 - 1:34PM
Pomerantz LLP announces that a class action lawsuit has been filed
against Walgreen Co. (“Walgreen” or the “Company”) (NYSE:WAG) and
certain of its officers. The class action, filed in United States
District Court, Northern District of Illinois, Eastern Division, is
on behalf of a class consisting of all persons or entities who
purchased Walgreen securities between March 25, 2014 and August 5,
2014 inclusive (the “Class Period”). This class action seeks to
recover damages against Defendants for alleged violations of the
federal securities laws under the Securities Exchange Act of 1934
(the “Exchange Act”).
If you are a shareholder who purchased Walgreen
securities during the Class Period, you have until June 9, 2015 to
ask the Court to appoint you as Lead Plaintiff for the class. A
copy of the Complaint can be obtained at www.pomerantzlaw.com. To
discuss this action, contact Robert S. Willoughby at
rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll
free, x237. Those who inquire by e-mail are encouraged to include
their mailing address, telephone number, and number of shares
purchased.
Walgreens operates as a retail drugstore chain
in the United States. The Company sells prescription and
non-prescription drugs and general merchandise through its
Walgreens drug stores. As part of a corporate reorganization
completed in connection with its acquisition of Alliance Boots on
December 31, 2014, Walgreens became a wholly owned subsidiary of
Walgreen Boots Alliance (“WBA”), a global pharmacy-led health and
wellbeing commercial enterprise headquartered in Deerfield,
Illinois.
The Complaint alleges that throughout the Class
Period, defendants issued false and misleading statements and/or
failed to disclose adverse information regarding Walgreens'
business and prospects, including the purported benefits of
Walgreens' strategic partnership with Alliance Boots GmbH.
Specifically, defendants publicly announced goals for fiscal year
2016 of $1 billion in combined synergies and $9 to $9.5 billion in
adjusted earnings before interest and taxes ("EBIT") for the
combined entity, but concealed a $1.8 to $2.3 billion fiscal year
2016 earnings shortfall and the reasons for the shortfall from the
investing public. As a result of defendants' false and misleading
statements and/or omissions during the Class Period, the price of
Walgreens stock traded at artificially inflated prices, reaching a
high of $76.08 per share.
On June 19, 2012, Walgreens announced that it
had entered into a strategic partnership with Alliance Boots GmbH
(“Alliance Boots”) to create a global pharmacy-led health and
wellbeing enterprise (the “Walgreen-Alliance Boots
Transaction”).
Defendants heralded the partnership as providing
an unmatched supply chain, an unparalleled portfolio of health and
wellness brands, and a unique platform in developed and emerging
markets. The deal would occur in two parts. Under “Step One,” which
took place in 2012, Walgreens acquired a 45% equity ownership stake
in Alliance Boots in exchange for approximately $6.7 billion in
cash and stock. Under “Step Two,” Walgreens acquired the remaining
55% on December 31, 2014 for approximately $5.3 billion in cash and
144.3 million shares of Walgreens’ common stock. Significantly,
whereas the first step of the transaction did not require a
shareholder vote, the second step did require shareholder
approval.
In August 2012, after Step One of the
Walgreen-Alliance Boots Transaction closed, the Company provided a
set of publicly announced goals for fiscal year 2016 (“FY 2016
Goals”). Defendants spoke about the benefits of the
partnership and the FY 2016 Goals became critically important
metrics that were regularly discussed by the Company and followed
by analysts because they quantified the purported benefits of the
merger and were important to assessing the merits of voting in
favor of Step Two of the merger. The goals included $1 billion in
combined synergies and $9 to $9.5 billion in adjusted earnings
before interest and taxes (“EBIT”).
On August 6, 2014, Walgreens and Alliance Boots
hosted an investor call. During the call, Gregory Wasson
(“Wasson”), Walgreens former Chief Executive Officer, and Walgreens
bundled the disclosure of the new FY 2016 EBIT goal, which finally
revealed the amount of the massive shortfall that had been
concealed during the Class Period and that the purported benefits
of the merger were not nearly as robust as represented, with
numerous optimistic statements.
Wasson disclosed that the Company was now
tracking to a “mid-point” of $7.2 billion for FY 2016 EBIT, stating
“we’re not happy about lowering our previous goals.” Wasson claimed
“we have been challenged by the ongoing global pharmacy
reimbursement pressure, which continues, and the rapid and
pronounced increase in generic drug pricing, which we did not fully
anticipate, and now expect to persist longer than we anticipated.”
Wasson also finally disclosed the reason for the shortfall, stating
that Walgreens had not been “able to fully mitigate [generic
inflation] given the structure of certain existing contracts.”
On August 7, 2014, Cowen and Company reported
that because the updated $7.2 billion EBIT estimate included a new
$1 billion in cost savings that were additive to the previously
disclosed $1 billion in synergies, Walgreens’ base business would
be declining at a negative 4% CAGR over the next two years. This
was far below the initial forecast of $9 to $9.5 billion back in
August 2012 that appeared to be based on a positive CAGR. In
addition, Cowen commented that “[m]anagement’s focus on the call
around increased reimbursement pressures and generic inflation is a
bit confusing to us, given this is not a new issue and shouldn’t
come as such a surprise,” adding that “everyone has known about the
issues of generic inflation” and “other players in the space have
been able to more than compensate for these issues.”
After these disclosures, the Company’s stock
price plummeted, dropping from a close of $69.12 per share on
August 5, 2014 to a close of $59.21 per share on August 6, 2014,
losing more than 14% of the value of the share price.
The Pomerantz Firm, with offices in New York,
Chicago, Florida, and San Diego, is acknowledged as one of the
premier firms in the areas of corporate, securities, and antitrust
class litigation. Founded by the late Abraham L. Pomerantz, known
as the dean of the class action bar, the Pomerantz Firm pioneered
the field of securities class actions. Today, more than 70 years
later, the Pomerantz Firm continues in the tradition he
established, fighting for the rights of the victims of securities
fraud, breaches of fiduciary duty, and corporate misconduct. The
Firm has recovered numerous multimillion-dollar damages awards on
behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com