(Reuters) – Walgreens Boots Alliance Inc. agreed to pay $ 105 million to settle a long-running class action lawsuit that accused the company of misleading shareholders about how rising generic drug prices and replacement pressures would harm its pharmacy business.
The preliminary settlement with cash was filed on Thursday in a federal court in Chicago after six months of mediation and requires the approval of a judge.
Walgreen’s denied the crime, but settled down to avoid the uncertainty, burden and costs of further litigation, conciliation papers show. The company did not immediately respond to requests for further comment on Friday.
Shareholders said Walgreens inflated its share price in 2014 by hiding bad news about drug prices and reimbursement rates, so investors could focus on its then-ongoing merger with Swiss Alliance Boots GmbH.
The contested statements concerned Walgreen’s prospects for the financial year 2016, the first full year after the Deerfield, Illinois – based company that was expected to complete the merger.
Walgreen Co., as the company was then called, lowered its forecast for that year on August 6, 2014. The merger ended at the end of 2014 and the lawsuit was filed in April 2015.
Thursday’s settlement covers Walgreen’s shareholders from 17 April 2014 to 5 August 2014. The main plaintiff is Industriens Pensionsforsikring A / S, a Danish pension fund. Walgreen’s rivals include CVS Health Corp. and Rite Aid Corp.
A related shareholder lawsuit accusing Walgreen officials and board members of poor oversight has been kept on hold pending a class action lawsuit. Lawyers for plaintiffs in that case did not immediately respond to requests for comment.
The case is Washtenaw County Employees Retirement System et al v. Walgreen Co. et alU.S. District Court, Northern District of Illinois.