CHICAGO (Legal Newsline) – A lawsuit filed in federal court this month against drugstore chain Walgreens alleges it withheld information from shareholders about a proposed merger.
The Washtenaw County Employees’ Retirement System in Michigan filed the lawsuit against Walgreens in the U.S. District Court for the Northern District of Illinois, Eastern Division, April 10.
The plaintiff alleges the company also made overstatements about its business that led to an artificially inflated stock price.
In 2012, Walgreens announced a partnership with Alliance Boots GmbH and said it would look to build a global pharmacy-led health and well-being enterprise. That year, Walgreens acquired 45 percent of Alliance. This past December, it acquired the remaining 55 percent.
In the end, Walgreens purchased Alliance for about $12 billion total in cash and stock, according to the lawsuit.
The lawsuit states that, as part of the merger, Walgreens set goals to have $9 billion to $9.5 billion in “adjusted earnings before interest and taxes.” However, by the summer of 2013, the company allegedly was $300 million below its target number and allegedly failed to inform investors, according to the lawsuit.
The plaintiff seeks class-action status for shareholders who held Walgreens stock between March 25, 2014 and Aug. 5, 2014.
They are represented by James E. Barz, Frank A. Richter, David C. Walton and Brian E. Cochran of Robbins Geller Rudman & Dowd LLP in Chicago and Thomas C. Michaud of Vanoverbeke Michaud & Timmony PC in Detroit.
United States District Court, Northern District of Illinois, Eastern Division, case number 1:15-cv-03187
