Drugstore.com shareholders challenge Walgreens’ acquisition

STEVENSON, Md. — The law firm of Brower Piven on Tuesday announced that a class action lawsuit has commenced in the Delaware Chancery Court on behalf of all shareholders of Drugstore.com, alleging violations of state law by the company’s board of directors relating to the proposed acquisition by Walgreens.

The complaint alleged that Drugstore.com's board of directors breached their fiduciary duties by failing to maximize shareholder value, among other things.

The complaint further alleged that while the company announced that the $3.80 in cash for each share of stock is a premium of approximately 102% over Drugstore.com's 30-day average closing stock price — and a premium of approximately 113% over the closing price of Drugstore.com's common stock on the last trading day prior to the announcement — the proposed transaction price actually represents a small premium to the company's summer stock high of $3.34 per share (13.8%) and a discount to prior trading prices in the last year. (The stock traded at a high of $3.91 on May 3, 2010.)

Drugstore.com stock was trading at a four-penny premium to the Walgreens offer Wednesday morning, apparently in anticipation of a rival offer or a sweetened pot from Walgreens. However, according to several analysts, that’s not likely to happen. “Walgreens' offer was for a whopping 113% premium,” wrote Rick Munarriz in a March 28 Motley Fool column, referencing the March 23 Drugstore.com closing price of $1.79. “A higher offer for a company that has missed Wall Street's profit targets in three of last year's four quarters seems highly unlikely.”

If consecrated, the Walgreens/Drugstore.com deal will make for an online health retailing powerhouse — Walgreens and Drugstore.com were ranked Nos. 68 and 46, respectively, out of all online retailers in the Internet Retailer’s "Top 500 Guide."