© Reuters. FILE PHOTO: People walk by a Walgreens, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York City, U.S., November 26, 2021. REUTERS/Andrew Kelly
By Jonathan Stempel
(Reuters) – Walgreens Boots Alliance (NASDAQ:) Inc agreed to pay $105 million to settle a long-running class-action lawsuit accusing it of misleading shareholders about how rising generic drug prices and reimbursement pressures would hurt its pharmacy business.
The preliminary all-cash settlement was filed on Thursday in a federal court in Chicago following six months of mediation, and requires a judge’s approval.
Walgreens denied wrongdoing, but settled to avoid the uncertainty, burden and cost of further litigation, settlement papers show. The company did not immediately respond on Friday to requests for additional comment
Shareholders said Walgreens inflated its stock price in 2014 by concealing bad news about drug prices and reimbursement rates, so investors could focus on its then-pending merger with Switzerland’s Alliance Boots GmbH.
The challenged statements concerned Walgreens’ outlook for its 2016 fiscal year, the first full year after the Deerfield, Illinois-based company expected to complete the merger.
Walgreen Co , as the company was then known, lowered its forecast for that year on Aug. 6, 2014. The merger closed at the end of 2014, and the lawsuit was filed in April 2015.
Thursday’s settlement covers Walgreen shareholders from April 17 to Aug. 5, 2014. The lead plaintiff is Industriens Pensionsforsikring A/S, a Danish pension fund. Walgreens’ rivals include CVS Health Corp (NYSE:) and Rite Aid (NYSE:) Corp.
A related shareholder lawsuit accusing Walgreen officers and directors of poor oversight has been on hold pending a resolution of the class action. Lawyers for the plaintiffs in that case did not immediately respond to requests for comment.
The case is Washtenaw County Employees Retirement System et al v Walgreen Co et al, U.S. District Court, Northern District of Illinois, No. 15-03187.
