A pension adviser has asked the Securities and Exchange Commission to investigate private meetings that top Walgreen execs held with investors who prodded the drugstore chain to reincorporate overseas for tax reasons.
CTW Investment Group, which advises union pension funds worth $250 billion, is raising questions about whether Walgreen’s meetings with investors Goldman Sachs, Jana Partners, Och-Ziff and Corvex ran afoul of fair disclosure rules.
“Walgreen may have put the vast majority of its investors at a disadvantage while positioning influential hedge funds to profit from material, non-public information,” said CTW’s Michael Pryce-Jones.
When news surfaced that Walgreen had held private talks with hedge funds in February and April, the retailer’s shares rose.
Walgreen is weighing a plan to redomicile in a lightly taxed country overseas such as Switzerland as part of its planned merger with British drugstore giant AllianceBoots.
Such moves, known as “tax inversions,” have become a hot-button issue in Washington, with Treasury Secretary Jack Lew calling for new legislation to block them.
Thus far, tax inversions have mainly been pursued by big drug companies, although the biggest, a proposed $100 billion acquisition by Pfizer of the UK’s AstraZeneca, got derailed.
CTW’s Pryce-Jones said that uncertainty about future tax legislation in both the US and abroad poses significant risks for corporations considering tax inversions.
Barclays recently estimated that Walgreen could save $783 million in the first year after an inversion.