Walgreens Boots Alliance, its former chief executive Gregory Wasson, and former chief financial officer Wade Miquelon have agreed to settle charges that they misled investors over the merger that created the pharmacy chain.
The Securities and Exchange Commission took the action over punchy financial targets issued when US-based Walgreens struck the deal with Europe’s Alliance Boots in 2012.
The transatlantic tie-up created a global pharmacy powerhouse, employing about 385,000 people with about 14,500 stores in 11 countries.
At the time of the transaction, the SEC said, the company projected the combined group would generate between $9bn and $9.5bn in adjusted operating income in the 2016 fiscal year.
However, it added that after completing the first step of the merger, Walgreens’ internal forecasts pointed to an increased risk it would miss the forecast. Walgreens, Mr Wasson and Mr Miquelon nevertheless “repeatedly publicly reaffirmed the projections without adequately disclosing the increased risk”.
The company later reduced its initial forecast by a fifth, sending Walgreens’ stock price down 14 per cent on the day it announced the more modest goal.
The company itself agreed to pay a $34.5m penalty, and Mr Wasson and Mr Miquelon to pay $160,000 each. They did not admit or deny the findings.
Melissa Hodgman, associate director of the SEC’s enforcement division, said: “As this case shows, we are committed to holding corporate executives accountable when they are in the best position to ensure that disclosures are accurate and not misleading.”
Walgreens Boots Alliance, said in a statement: “The settlement does not involve any of [the company’s] current officers or executives, nor does it allege that anyone acted intentionally or recklessly at any time.”
It added: “Walgreens Boots Alliance co-operated fully with the SEC’s investigation and believes the agreement is in the best interest of the company.”
US investors initially gave a cool reception to the complex deal that created the company. It involved the sale to Walgreens of a 45 per cent stake in Alliance Boots, which was backed by private equity group KKR, with an option for the US group to acquire the remaining portion three years later, which it did.
Shares in the Illinois-based group, which gained entry into the Dow Jones Industrial Average in the summer, traded slightly lower in New York on Friday, giving it a market capitalisation of $72bn.
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