Wasson informed the Deerfield, Ill.-based company's board that he will retire shortly after the shareholder vote on the merger with the U.K.'s largest drugstore chain, scheduled for Dec. 29, the company said in a press release late Wednesday.
Stefano Pessina, executive chairman of Alliance Boots, will serve as the company's acting CEO following the merger's close. Walgreen Chairman James Skinner will become executive chairman of the combined company. The merger is expected to be completed in the first quarter.
Walgreen shares were surging 4.5% to $71.28 on Thursday. Here's what analysts said.
George Hill, Deutsche Bank (Buy; $69 PT)
We suspect the news of Wasson's departure will be viewed as a modest positive by investors. Wasson presided over several high-profile controversies during his tenure, including the dispute with Express Scripts, the chronic underperformance of the retail business relative to CVS, and the recent miscommunication of underlying business performance as it related to the merger with AllianceBoots. While we do not believe that Wasson's departure is tied to another negative earnings revision, the circumstances have a timing and feel similar to the departure of former CFO Wade Miquelon prior to the August 6 preannouncement. Thus, some investor caution is warranted.
We maintain our Buy rating on WAG shares and adjust our price target to $69 reflecting 15x our C2016 EPS estimate of $4.60. We believe there is the potential for earnings estimates to increase if management has overestimated the long-term margin pressure or increases cost savings. The key risks for WAG shares are reimbursement pressure, competitive environment, or if synergy benefits from the AB and ABC deals do not perform to expectations.
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