Shareholders Expected to Bless Walgreen-Boots Deal

CHICAGO (Chicago Tribune/TNS) -

Walgreen plans to tie a bow around the acquisition of European counterpart Alliance Boots by the end of the year by announcing the results of a shareholder vote Monday at a meeting in New York.

Walgreen bought a 45 percent stake in the Switzerland-based company in 2012 for $6.7 billion. Shareholders are expected to approve buying the remaining 55 percent, analysts and investors say, making way for Walgreen to close the deal by Dec. 31.

That date also will mark the departure of Walgreen CEO Greg Wasson, who is handing the baton to Stefano Pessina, Executive Chairman of Alliance Boots. Pessina will lead the company until the board finds a successor and will own 16 percent of the new holding company, Walgreens Boots Alliance.

Several other Walgreen executives have left in recent months, including former CFO Wade Miquelon, who sued the company in October, saying he was defamed by comments that suggested he was responsible for a $1 billion forecasting error. Kermit Crawford, Walgreen’s president of pharmacy, health and wellness, said he also will retire at year-end, after 31 years with the company.

Former Kraft CFO Tim McLevish replaced Miquelon. And two executives from Alliance Boots have taken posts at Walgreen: Alex Gourlay, president of customer experience and daily living, and Richard Ashworth, president of pharmacy and retail operations, who will assume Crawford’s responsibilities.

“Alliance Boots executives are taking over Walgreens,” said Michael Pryce-Jones of CtW Investment Group, which owns 2.5 million shares of Walgreen stock, or about 0.3 percent, “and that’s a very bizarre situation when you usually pay a control premium to keep control of your company.”

Pryce-Jones said he thinks Walgreen is paying too much to acquire the privately held Alliance Boots. His group has recommended that shareholders reject the deal.

“If the market saw … (the) premium,” he said, “I think alarm bells would be ringing.”

He has also said he’s concerned about the company embarking on an international expansion without clear leadership. Wasson’s departure was unusual, if not surprising. As recently as Nov. 24, a proxy the company filed with the Securities and Exchange Commission said Walgreen fully expected Wasson to continue as CEO of Walgreens Boots Alliance.

Other major investors that own about 10 percent of Walgreen’s common stock already have agreed to support the merger. Pessina (7.7 percent), Kohlberg Kravis Roberts & Co. (0.7 percent) and Jana Partners (1.5 percent) plan to vote in favor of the merger, according to the Walgreen proxy.

Walgreen operates the largest drugstore chain in the United States, with net sales of $76.4 billion in its most recent fiscal year, which ended Aug. 31. It reported 8,309 locations in 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.

As of Aug. 31, Alliance Boots had pharmacy-led health and cosmetic retail businesses in 11 countries and operated more than 4,600 health and beauty retail stores.