Walgreen chief toppled in coup
STEFANO Pessina, the billionaire boss behind Boots the Chemist, has staged a boardroom coup toppling the chief executive of American partner Walgreen. A schism had developed between the Italian tycoon who built Europe’s best-performing pharmacy chain and Walgreen, the US firm which intends to buy the 55pc of Alliance Boots it does not own.
Bitter boardroom rows overshadowed the £9bn takeover of Alliance Boots by Walgreen, i n which Pessina retains a 16pc stake.
This came to a head this week as Greg Wasson, the 35-year veteran of Walgreen reversed a decision to stay on post-merger and said he would retire after it completes.
Tensions grew after the board of Walgreen overruled Pessina and abandoned its plans to move its Chicago headquarters to Europe.
The shift was intended to be part of the takeover but Walgreen bowed to pressure from shareholders and the US Government and decided to keep its tax domicile in America. So-called tax inversions, in which American firms move their head office abroad to countries with lower tax rates, have angered US politicians and Walgreen feared a consumer backlash.
While Pessina was sympathetic to the argument, having spoken with shareholders, he fought strongly to get his way. Not used to losing boardroom battles, he is said to have been ‘apoplectic’ about the decision over its headquarters.
Both parties have had to sit around a table since, to hatch the details of combining the two firms. Insiders say while Pessina had ‘frank discussions’ about the domicile, it was no longer an issue and the arguing had stopped.
The board made a collective decision and he had jointly presented the agreement over the summer.
However, sources say that relations were still ‘not fantastic’ as the parties jockeyed over their vested interests to secure the best deal. Pessina had also let it be known he thought the business could be run better. Wasson appears to have been the casualty.
The source said this was not about Pessina and Walgreen, adding that it was about ‘what’s best for the company’.
Pessina, executive chairman of Alliance Boots, will be acting chief executive during the search for a permanent replacement.
Former McDonald’s boss Jim Skinner, who was key to the recent changes, is to be the executive chairman of the merged company.
Walgreen is in the sick bay. It had to revise its financial forecasts by $1bn and parted company with its finance director Wade Miquelon.
To make matters worse, Miquelon has now launched a legal action against Pessina and Wasson accusing them of making ‘false and disparaging’ comments about him in a newspaper report.
Miquelon stepped down after a six-year tenure.
On top of these problems, CtW Investment Group, a union-backed pension adviser firm, said it wants the Walgreen board to delay the buy-out of Alliance Boots, calling for an investigation into the issue.
It said that just two weeks away from a vote on a transformational merger, shareholders do not have a clear sense of who will be running the company.
‘We believe Walgreen must postpone this vote and fully disclose its succession plan,’ it said.
Michael ‘PJ’ Pryce- Jones, the senior governance policy analyst at CtW, said: ‘For Walgreen’s shareholders it changes the core premise of the deal. Why are we paying a premium to be taken over by AB [Alliance Boots]?
‘And if we simply needed a new management team, we shouldn’t have to buy another company to achieve this.’