Walgreens Boots Alliance Inc agreed to pay $105 million to settle a long-running class-action lawsuit accusing the company of misleading shareholders about the impact of rising generic drug prices and reimbursement pressures on its pharmacy business.
Following six months of mediation, the preliminary all-cash settlement was filed on Thursday in a federal court in Chicago, and it must be approved by a judge.
According to settlement papers, Walgreens denied wrongdoing but settled to avoid the uncertainty, burden, and cost of further litigation. On Friday, the company did not respond immediately to requests for additional comment.
Shareholders claim Walgreens artificially inflated its stock price in 2014 by concealing bad news about drug prices and reimbursement rates so investors could focus on the company’s 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 merger was expected to be completed.
On August 6, 2014, Walgreen Co, as the company was then known, lowered its 2014 forecast. The merger was completed in late 2014, and the lawsuit was filed in April 2015.
The settlement announced on Thursday applies to Walgreens shareholders from April 17 to August 5, 2014. A Danish pension fund, Industriens Pensionsforsikring A/S, is the lead plaintiff. CVS Health Corp. and Rite Aid Corp. are among Walgreens’ competitors.
A related shareholder lawsuit accusing Walgreen officers and directors of poor oversight has been put on hold until the class action is resolved. Lawyers for the plaintiffs in that case did not respond to requests for comment right away.