Highlights of Glenview Capital's third quarter 13F filing (Part 10 of 10)
Glenview Capital and Walgreens
Glenview Capital Management exited its position in Walgreens (WAG) in the third quarter. The position accounted for 1.75% of the fund’s total portfolio in the second quarter.
Overview of Walgreens
WAG operates the largest drugstore chain in the US. It had net sales of $76.4 billion in the fiscal year ending on August 31, 2014. It sells prescription and non-prescription drugs. It also sells general merchandise—including convenience and fresh foods, household items, personal care, photo finishing, and beauty care.
As of August 31, 2014, WAG and its subsidiaries operated 8,309 locations in 50 states, the District of Columbia, Puerto Rico, and the US Virgin Islands. In 2014, the company opened or acquired 268 locations.
WAG won’t relocate headquarters in tax inversion deal
In August, stocks fell after the company backed out of a decision to relocate its headquarters after buying the remaining stake in Alliance Boots GmbH—a European drugstore chain. In June, a Deutsche Bank report said that the tax inversion could have saved WAG ~$1 billion in taxes by 2018.
Management changes
In August, CFO Wade Miquelon was replaced by Timothy McLevish. In October, Miquelon filed a lawsuit alleging he was defamed in news reports by the chief executive and directors over a forecasting error. He said that his exit from the retailer was purely voluntary.
An August Wall Street Journal report by Michael Siconolfi noted that Miquelon said in a board meeting in April that the pharmacy unit expects $8.5 billion in fiscal 2016 earnings. But in July, he lowered his estimate by $1.1 billion. The lower estimate was due to changes in the prices of certain generic drugs sold to Medicare.
In December, Greg Wasson, president and CEO of WAG, said that he will retire shortly after the close of the second step of the Alliance Boots transaction. Shareholders are scheduled to vote on the transaction on December 29. WAG sought shareholder approval in August over the acquisition of the remaining 55% of Alliance Boots after the initial 45% investment was completed in 2012.
Walgreens Boots Alliance will be listed on NASDAQ
A new holding company that will be formed in connection with the transaction. It will be named Walgreens Boots Alliance. WAG said it will apply to list the shares of Walgreens Boots Alliance, Inc. common stock on NASDAQ under the ticker symbol WBA. It said it will delist from both the NYSE and the Chicago Stock Exchange.