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The Shareholder Forumtm

independent review of issues relating to

Stock Buyback Policies


Walgreen Co.

for shareholder consideration in decisions about a

proposed merger into

Walgreens Boots Alliance, Inc.





For a printable copy of this report, click here.

Forum Report: Walgreen Stock Buybacks


Walgreen Stock Buybacks: Issues to Be Considered by Investors

Walgreen is being asked to provide information supporting investor analyses of the effects of corporate stock buybacks, specifically in the context of the company’s proposed merger and notes offerings to create Walgreens Boots Alliance.[*] The following three issues have been defined for consideration:


Market pricing influence of purchases – Since announced intentions as well as actual purchasing activity can be expected to stimulate higher trading prices for the company’s stock and possibly lower prices for debt securities, investors will want to understand as much as possible about company policies for executing and reporting buybacks.

Relevant period: from the time of announcement until completion of buyback activity


Allocations of earnings – To calculate the “financial engineering” effects of dividing current and projected earnings among a reduced number of shares, analysts will need to include reasonable estimates of buyback prices as well as changes in other capital costs.

Relevant period: projections of 3 to 5 years, assuming future issuance and purchasing of stock will gradually diminish the effects of current buybacks


Corporate adaptability – Projections of earnings must include assumptions about the effects of reduced equity capital on the company’s ability to develop new business opportunities and respond to threats.

Relevant period: extending to years in which earnings would be significantly influenced by business operations and market conditions that have not yet been identified

The importance of each of these issues will depend on specific investor interests, particularly in relation to the timing of any anticipated buying, selling or portfolio valuation objectives. For example, an investor expecting to sell Walgreen stock within a year or when a price target is reached might be concerned primarily with the first defined issue concerning the market pricing influence of purchases. An indexed fund that expects to own the stock for decades or a buyer of Walgreen’s newly issued notes due in 2044, however, might focus attention primarily on the third issue concerning corporate adaptability.

Forum participants are invited to comment on the analysis of these issues, and on the information that Walgreen might reasonably provide to support sound investor decisions. The company’s response will be reported early next week.

GL – November 12, 2014

Gary Lutin

Chairman, The Shareholder Forum

575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335



[*] For SEC filings, see the Forum’s “Company Reports” references or the Walgreen Co. Investor Relations website.




This program is open to all shareholders of Walgreen Co. (WAG) and to any fiduciaries or professionals concerned with their investment decisions. Participation is free of charge, according to the Shareholder Forum's standard Conditions of Participation.

The purpose of the program is to define issues relevant to long term shareholder interests in the proposed merger of Walgreen Co. into Walgreens Boots Alliance, Inc., and to support an impartial review and access to information required for investor consideration of the issues. As stated in the Conditions, all Forum participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants. Forum polices are intended to support anonymous communication, and provide that participants will not be identified or quoted without their explicit permission.

Information requests and suggestions of issues that may be relevant to Darden shareholder interests can be addressed to the Shareholder Forum at


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