Bloomberg, May 14, 2014 article: "Jana Says Firm Is Working With Walgreen After Transaction" [Activist promotion based on "behind the scenes" preferential access]

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Note: A few months after publication of the article below, Walgreen reported in an August 6, 2014 press release that it had rejected the tax "inversion" restructuring encouraged by Jana and other activist investors, and that the executive of the merger company that Jana had reportedly expected to be "taking over" will serve only as the combined company's vice chairman responsible for strategy and M&A.

Source: Bloomberg, May 14, 2014 article

Bloomberg.com Businessweek.com

Bloomberg

Jana Says Firm Is Working With Walgreen After Transaction

By Saijel Kishan | May 14, 2014 6:59 PM ET

Barry Rosenstein, founder of Jana Partners LLC, said his hedge-fund firm is working behind the scenes with Walgreeen Co. after the drugstore chain’s purchase of a controlling stake in U.K. retailer Alliance Boots Gmbh.

“Effectively, this is Alliance Boots taking over,” Rosenstein said at the SkyBridge Alternatives Conference in Las Vegas today.

The fund company invested $1 billion in Walgreen to become one of the biggest shareholders of the drugstore chain, Scott Ostfeld, a partner at Jana, said last month. Walgreen, based in Deerfield, Illinois, bought 45 percent of Alliance Boots in August 2012, giving it the option to acquire the rest of Europe’s largest pharmacy chain within three years. Jana, based in New York, is known for its campaigns to push companies for change in order to increase shareholder value.

Rosenstein said Walgreen (WAG)’s earnings before interest, depreciation and amortization, or Ebitda, margins are below those of CVS Caremark (CVS) Corp. and Alliance Boots. The measure of Ebitda divided by total revenue is one way to compare profitability.

“Something is wrong,” Rosenstein said of Walgreen. He described Alliance Boots’ executive chairman, Stefano Pessina, as a “great entrepreneur” he has gotten to know well.

“I think there is going to be tremendous upside,” Rosenstein said.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net

To contact the editors responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net Josh Friedman, Daniel Taub

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