The entry of an activist shareholder into the board of Walgreen Co. (WAG) may be just what the doctor ordered for options traders betting on the largest U.S. pharmacy chain after a 17 percent plunge.
While the Deerfield, Illinois-based company?s stock has tumbled since reaching a record in June, bullish contracts are the most expensive relative to bearish ones in almost seven years, data compiled by Bloomberg show. Investors are lured by the potential for share buybacks and earnings growth as hedge fund Jana Partners LLC, which has agitated for a more shareholder-friendly use of Walgreen?s cash, struck a deal with the company on three board seats.
Walgreen dropped 14 percent on Aug. 6 after saying it won?t shift its tax address out of the U.S. even as it announced a $15.3 billion purchase of the rest of Switzerland-based Alliance Boots GmbH. Investor disappointment over that decision waned this month after the board changes.
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