A major US pension adviser has written to regulators asking them to investigate plans by Walgreens, the country’s biggest pharmacy chain plans to transfer its tax base from the US to Switzerland as part of its takeover of European peer Alliance Boots.
The CtW Investment Group, which represents union pension funds holding $250bn (£146bn) in investments, asked the Securities and Exchange Commission (SEC) investigate an apparent violation of a rule designed to prevent disclosure of material inside information to favoured groups.
According to the complaint, Walgreens executives held private meetings with analysts and hedge funds in which they discussed potentially restructuring the company’s planned Alliance Boots acquisition. This would involve a so-called tax inversion, enabling the group to move its headquarters and avoid the US’s higher corporate tax rate.
Walgreens is reportedly to be considering the inversion to lower its tax rate and save an estimated US$783m in the first year after the inversion.
“We are deeply troubled that Walgreens 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 Michael Pryce-Jones, CtW’s senior governance researcher.
“The issues described in the complaint raise broader concerns about management’s accountability to shareholders at a time when a major strategic transformation is on the table.”
Walgreens’ planned comes amid a growing political controversy in the US sparked by drug firm Pfizer’s ultimately unsuccessful bid for the UK’s AstraZeneca and AbbVie’s current bid for the UK’s Shire.
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