Walgreens investors: Retailer overstated Boots benefits
Walgreens Boots Alliance Inc. was sued by a pension fund alleging the biggest U.S. pharmacy chain exaggerated the benefits of a 2014 merger with a European retailer that helped it build a global business.
Those and other misstatements last year artificially pumped up the value of shares last year while concealing an earnings shortfall of $1.8 billion to $2.3 billion in fiscal 2016, according to a securities-fraud complaint filed April 10 by the Washtenaw County, Michigan, employees' pension plan.
The case against Walgreens's predecessor -- Walgreen Co. -- was filed a day after the pharmacy chain announced plans to close 200 of its 8,232 U.S. drug stores to reduce costs as profit is squeezed by competition and lower reimbursements from pharmaceutical insurers.
The group suit in Chicago federal court relies in part on a complaint filed by ex-Chief Financial Officer Wade Miquelon, who separately sued the company last year saying he was improperly ousted and wrongfully blamed for bungling the earnings forecast. Miquelon and former Chief Executive Officer Greg Wasson, who retired in 2014, are named as defendants along with the company in the new case.
"Due to the misleading statements, investors and analysts were completely unaware of the amount of the company's forecasted shortfall," according to the complaint.
Michael Polzin, a spokesman for Deerfield, Illinois-based Walgreens, declined to comment on the claims. Miquelon's lawyer, David Bernick of Philadelphia-based Dechert LLP, didn't immediately respond to phone and e-mail messages seeking comment.
Darren Robbins, a lawyer for the plaintiffs, said in a statement that the suit seeks to cover investors who bought common stock from March to August of 2014.
Walgreens fell 0.3 percent Monday in Nasdaq trading. They're up 20 percent this year.
Walgreen Co. in 2012 took a 45 percent stake in Alliance Boots for $6.7 billion and last year paid about $15.3 billion for the remainder.
The case is Washtenaw County Employees' Retirement System v. Walgreen Co., 15-cv-03187, U.S. District Court, Northern District of Illinois (Chicago).