Walgreen adds activist hedge fund founder to board
Walgreen has named Jana Partners founder Barry Rosenstein to its board, and the activist investor will get a say in choosing at least one additional director for the nation's largest drugstore chain.
Walgreen Co. is feeling shareholder pressure after lowering its forecast for the earnings it expects after combining with health and beauty retailer Alliance Boots, which runs the United Kingdom's largest drugstore chain. The Deerfield, Illinois, company's shares have largely plunged since it dropped that forecast last month and said it will no longer consider an overseas reorganization that would have trimmed its U.S. taxes
Walgreen said Monday that Jana Partners will recommend an additional independent director who has no ties to either the drugstore chain or the hedge fund. If another board vacancy opens and Walgreen decides to fill it, then Jana and the nation's largest drugstore chain must agree on the replacement.
Jana Funds holds about a 1.3 percent stake in Walgreen, or 12.5 million shares.
Earlier this summer, the hedge fund disclosed that it had built up a stake in PetSmart Inc., and it wanted the pet food retailer to consider selling itself. Last month, the company said it would start considering that.
Rosenstein, 55, will join the finance committee of Walgreen's board. He said in a statement from the drugstore chain that he was eager to "work constructively" with the company's management.
Walgreen shares edged up 22 cents to $64.17 Monday before markets opened and after the company announced Rosenstein's appointment. The stock had slipped below $70 after the company announced its forecast change last month.
Shares have climbed 11 percent so far this year, as of Friday. That topped the 8.6 percent gain from the Standard & Poor's 500 index over the same span.
Walgreen will report its fiscal fourth quarter earnings Sept. 30.