Management Turnover as Change Agent

Friday, October 10, 2008

Walgreens' Chairman and CEO, Jeffrey Reins, Gives up Reins

Walgreens CEO and chairman Jeffrey A. Reins today announced his immediate resignation as CEO, chairman and director of the firm.  Reins, who headed up Walgreen's latest failed attempt to acquire Longs Drug Store Corp. was the company's CEO since 2006.  He had worked at Walgreens since 1982 when he began as an assistant store manager.  He then worked his way up the corporate ladder.  The company has insisted that Rein's departure had nothing to do with the firm's failed acquisition attempt of Longs.  According to a story in Reuters,
"This is not related to the Longs proposal," a company spokesman said. He declined to comment further on Rein's departure, which is effective immediately.
It is easy to conclude that Rein's has been forced to fall on his sword over his failed acquisition attempt and the fact that CVS, Walgreen's main competitor,
 has succeeded in going forward with the acquisition of Longs.  CVS's offer appears to have succeeded despite the fact it was lower than that of Walgreens.  Walgreen's was forced to withdraw its cash offer Wednesday when it became clear they would not succeed in their efforts.  Longs originally rejected Walgreens' offer back in September.  According to
 the a commercial real estate firm,
Longs rejected Walgreen’s higher offer on Sept. 17, more than one month after accepting the $2.7-billion offer from CVS, saying the regulatory risk was too great. Walgreenbresponded later that month disagreeing with the assessment. A few days after that, Longs reported that the Federal Trade Commission was investigating whether a Walgreen acquisition would reduce competition among retail pharmacies in parts of California, Nevada and Hawaii, where Longs has most of its stores and where there is significant overlap with Walgreen stores.
It appears Reins' failed to handle the acquisition attempt properly or should not have done it all.  There still remains a question as to Walgreen's ultimate motive in the acquisition a
ttempt.  Were they only trying to prevent CVS from getting Longs or was Walgreens really interested in the chain?  Whatever the reason, Reins has been forced to give up the reins.  

The company named lead director Alan G. McNally as Rein's interim replacement as both CEO and chairman.  McNally has been a member of the board since 1999 and was previously the CEO and chairman of Harris Bancorp.

Keep a close eye on what Walgreens does over the next few months and who they ultimately choose as the permanent replacement for Reins.

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