Dec. 11 (Bloomberg) -- Walgreen Co.’s shareholder vote to approve the purchase of Alliance Boots GmbH should exclude the U.S. drugstore chain’s biggest investor because of a conflict of interest, a union-sponsored pension advisory firm said.
Walgreen said yesterday that Chief Executive Officer Greg Wasson will retire, to be replaced temporarily by its top shareholder, Stefano Pessina -- who also runs Alliance Boots. The move changes the “core premises” of the deal, said Dieter Waizenegger, executive director of CtW Investment Group, in a letter today. His firm represents pension funds that have more than $250 billion in assets under management and hold about 2.5 million shares of Walgreen, or a stake of about 0.3 percent.
Wasson’s departure “specifically raises the question of who is the true acquirer in a deal where Stefano Pessina is set to run Walgreen while also receiving a handsome premium for his share of Alliance Boots GmbH,” Waizenegger said. “Although Walgreen shareholders are paying a premium to acquire Alliance Boots, it seems now more than ever the case that Alliance Boots’ owners and management will be the dominant forces.”
Walgreen bought a 45 percent stake in Boots in 2012, a move that gave Pessina a seat on the company’s board. Walgreen agreed to purchase the rest of the Bern, Switzerland-based company for $15.3 billion in August, seeking to infuse its neighborhood pharmacies with the more stylish retail vision of Boots, which controls about 40 percent of the U.K. market for beauty products.
In the letter sent today to Walgreen Chairman James Skinner, Waizenegger also reiterated his call for a delay of the Dec. 29 meeting to vote on the purchase. Wasson’s departure reinforces the view that the acquisition is unnecessary, risky and overvalued, Waizenegger said. Pessina, 73, already owns 7.6 percent of Walgreen’s stock, which will rise to 16 percent of the combined company after the deal closes.
Investors have embraced the deal. Shares of Deerfield, Illinois-based Walgreen rose 5.8 percent to $72.08 at 2:47 p.m. in New York. The company had gained 19 percent this year through yesterday’s close.
Michael Polzin, a Walgreen spokesman, didn’t immediately return an e-mail seeking comment.
An independent vote would exclude shares held by Pessina, KKR & Co. and their investors, CtW said. Private-equity firm KKR, which teamed up with Pessina buy Alliance Boots in 2007, holds less than 1 percent of Walgreen shares, according to data compiled by Bloomberg.
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