Walgreens Will Pay $192.5 Million to Settle Rite Aid Buyout Suit

October 19, 2023 by

Walgreens Boots Alliance Inc. agreed to pay $192.5 million to resolve investor claims that some of the drugstore chain’s executives misled them about its 2015 bid to acquire rival Rite Aid Corp.

Deerfield, Illinois-based Walgreens – the second-largest US pharmacy chain – will pay Rite Aid shareholders to settle a federal class-action lawsuit accusing the company of making false statements about how likely it was regulators would approve the deal, according to a court filing published late Tuesday.

Those statements artificially inflated Rite Aid’s stock price and when the merger fell apart in 2017, investors lost millions of dollars, according to the filing in federal court in Harrisburg, Pennsylvania.

“Settlement negotiations were difficult, adversarial, and vigorously executed by both sides,” the investors’ lawyers said in the court document.

The accord was reached three weeks before the federal securities-fraud case was set to go to trial before US District Judge Christopher Conner. In April, the judge told Walgreens’ lawyers in a pre-trial hearing they should consider settling.

Walgreens officials didn’t immediately respond to an email seeking comment on Wednesday.

The settlement should provide some much-welcome news for investors in Rite Aid, which filed for Chapter 11 earlier this week. The chain – founded in 1962 – sought bankruptcy protection to deal with lawsuits tied to the US’s opioid epidemic and address $4 billion in debt.

Eight years ago, Rite Aid executives agreed to a $17.2 billion buyout bid by Walgreens to acquire the chain’s more than 4,000 stores. But the bid – which had gone through several alterations — fell apart in 2017 because of antitrust concerns. Walgreens wound up paying $4.4 billion to buy 1,932 stores.

Chabot v. Walgreens Boots Alliance, Inc. 18-cv-02118, US District Court for the Middle District of Pennsylvania (Harrisburg).