US-based retail pharmacy chain Walgreens Boots Alliance (WBA) has agreed to pay $192.5m to settle a class action lawsuit filed by investors of drugstore chain Rite Aid, Reuters reported.
On 27 October 2015, Rite Aid and Walgreens announced a merger agreement under which WBA would acquire all outstanding shares of Rite Aid.
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The two companies mutually agreed to extend the end date of their merger agreement from 27 October 2016 to 27 January 2017.
The agreement, which was amended on 29 January 2017, was terminated in June 2017.
In a press statement, Rite Aid said that the termination decision follows the receipt of feedback from the US Federal Trade Commission (FTC) “that led the company to believe that the parties would not have obtained FTC clearance to consummate the merger”.
Following this, Rite Aid investors, who lost money on the company’s stock during the company’s failed merger with Walgreens, filed a federal class-action lawsuit.
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By GlobalDataThe action accused Walgreens’ executives of making false statements that misrepresented the likelihood that regulators would have approved the merger.
Those statements temporarily inflated the stock price of Rite Aid, but its investors lost millions of dollars.
Bloomberg quoted the investors’ lawyers as saying: “Settlement negotiations were difficult, adversarial and vigorously executed by both sides.”
The settlement with investors comes closely after Rite Aid filed for bankruptcy protection as it plans to implement financial restructuring amid opioid-related lawsuits against it.
The retailer, which has more than $3.3bn in debt, is considering putting a significant number of its stores into liquidation and divesting or handing over control of its remaining operations to creditors.
Last month, Rite Aid also announced to close approximately 400 to 500 of its over 2,300 drugstores in bankruptcy.
Walgreens operates stores under its namesake brand Boots stores in the UK and Duane Reade stores in the US.
