Editor’s Note: This is the Paw Print Rewind, a daily recap of the top news headlines.
CVS Health buying Target’s pharmacy business for $1.9 billion
CVS, the U.S.’ second-largest drugstore operator with 7,800 stores will acquire Target’s 1,660 pharmacies in 47 states with about $4 billion in annual sales, and the Minneapolis-based retailer’s nearly 80 clinics.
The pharmacies will continue to be operational under the CVS/pharmacy brand name, and their clinics will operate under the MinuteClinic brand.
“The healthcare industry is evolving rapidly. In this environment, success is all about effectively managing costs, quality, and access.”
-Larry Merlo, CVS Health CEO
Despite the loss of revenue, Target will drop its sales, general, and administrative costs by $1 billion because of the deal.
The move fits with the company’s focus on a handful of categories where it believes they can be most competitive including apparel, children items, and health and wellness related goods, according to Target CEO Brian Cornell. The company will continue to handle over-the-counter drug sales.
The deal should bring more customers into Target stores, according to Cornell.
“[CVS] brings scale, cost efficiency; they bring expertise that we just could not bring to a space that we were operating as a subscale player.”
-Brian Cornell, Target CEO
The two companies are also planning to co-develop 5-10 small-format stores.
The deal will also affect both companies’ plans for share buybacks.
Target will likely use some of the expected $1.2 billion in after-tax proceeds for share repurchases, according to the company.
In contrast, CVS cut its 2015 share repurchase program by $1 billion to $5 billion because of the transaction, which will be financed with debt.
Judge rules over Greenberg’s 2008 bailout, awards no damages
Judge Thomas Wheeler of the Federal Court of Claims awarded no damages to American International Group (AIG) shareholders led by former CEO Maurice Greenberg Monday in Washington in their lawsuit against the U.S. government, despite finding that the U.S. Federal Reserve exceeded its authority in the insurer’s 2008 bailout.
“In the end, the Achilles; heel of Starr [International]’s case is that, if not for the government’s intervention, AIG would have filed for bankruptcy.”
-Thomas Wheeler, Federal Court of Claims judge
Greenberg, through Starr International, sued the U.S. government in 2011, arguing that federal officials acted illegally in the initial $85 billion load package to the company, which included a 14 percent interest rate and a nearly 80 percent stake.
At the time of the bailout, Starr International was AIG’s largest shareholder with a 12 percent stake.
The 90-year-old sought as much as $50 billion in damages for Starr and about 270,000 other shareholders.
The Federal Reserve believes its actions during the bailout were “legal, proper, and effective,” according to an agency statement.
The Justice Department is reviewing the court’s decision, according to spokeswoman Nicole Navas.
Gap closing 175 stores, cutting headquarter jobs
Gap will close 175 of its namesake brand North American stores over the next few years, and 250 jobs at the company’s San Francisco headquarters.
“Management is trying to control the exposure to the Gap brand until they can have some compelling product to really [rejuvenate] the top line and profitability.”
-Betty Chen, Mizuho Securities USA analyst
Gap expects to close the aforementioned quarter of its 675 namesake stores over the next few years, according to the company, resulting in about $300 million in sales losses.
Gap also expects to incur one-time costs of $140-$160 million, according to the company.
After the closures, Gap will have 500 namesake stores in North America and 300 outlet stores. The company also plans to close some European stores, according to Gap.
GM plaintiffs add racketeering claim to recall lawsuits
Plaintiffs suing General Motors over a series of safety-related recalls last year have accused it of working with a law firm and claims-management company to conceal an ignition-switch defect linked to 114 deaths, according to an amended complaint filed June 11 in Manhattan federal court.
Over 200 lawsuits have been consolidated in this case against GM over the injuries, deaths, and economic losses attributed to the ignition switch and other safety problems that prompted recalls of millions of vehicles.
The lawsuit seeks to include over 20 million vehicle owners requesting over $10 billion in damages, according to plaintiffs’ lawyers.
The complaint proposes certification of a class encompassing anyone who owned or leased a GM car from 2009-2014, as well as anyone who purchased a car from “New GM” after the company’s bankruptcy. The recalls tarnished GM’s brand, according to plaintiffs, and caused vehicles to lose as much as $4,000 in value.
GM committed fraud and violated racketeering laws by covering up the ignition switch defect, according to the revised lawsuit. GM, outside law firm King & Spalding, and claims-management company ESIS knew about the problem but kept it from private litigants and the public.
King & Spalding and ESIS are both not named as defendants.
The complaint contained no new information, according to GM spokesman James Cain, and the company looked forward to “setting the record straight in court.”
Somali Islamists kill at least three soldiers in roadside blast
Somali Islamist Al Shabaab militants detonated a roadside bomb that killed at least three soldiers passing in a military vehicle southwest of Somali’s capital of Mogadishu, according to the rebel group and military captain Farah Nur.
“A roadside bomb hit one of our military pick-ups. So far we know three soldiers died.”
-Farah Nur, Soamli military captain
The vehicle was burned out by the blast, according to Nur, and the death toll could rise.
The attack took place around the village of Hawaabdi, according to Nur, about 10 miles southwest of Mogadishu.
“We targeted a remotely controlled bomb at a government military.”
-Sheikh Abdiasis Abu Musab, al Shabaab military operations spokesman
Airbus building OneWeb satellites to beam Internet from space
Airbus will design and build about 900 satellites for privately owned OneWeb, which plans to offer high-speed Internet access from space to billions of people worldwide, according to company officials.
About 700 satellites, each of which weighing less than 330 pounds, will be launched into orbit around Earth starting in 2018. The rest will stay on the ground until replacements are needed, according to OneWeb.
The project will cost between $1.5-$2 billion bankrolled in part by Richard Branson’s Virgin Group and chipmaker Qualcomm, according to OneWeb founder and CEO Greg Wyler.
Airbus Defense and Space will build the first 10 spacecraft at its Toulouse, France facility before shifting production to the United States, according to Airbus.
Some of OneWeb’s satellites will be flown by Branson’s space company, Virgin Galactic.
As part of the deal, Branson and Qualcomm executive chairman Paul Jacobs joined OneWeb’s board of directors.
Murdoch sons promoted at Fox, Carey advising them
Twenty-First Century Fox has promoted James Murdoch to CEO and his brother, Lachlan, to executive co-chairman, while naming Chase Carey as executive vice chairman.
Carey will stay at the company for another year to support James and Lachlan in their new positions at the media company.
Rupert Murdoch, who controls Fox through a trust that owns 39 percent of the company’s voting shares, will become executive co-chairman.
The management changes will take effect on July 1.
All corporate functions at Fox, including the company’s TV and film divisions, will report jointly to James and Lachlan.
Carey is staying with the company to support the Murdoch brothers, and will serve in his new position through June 30, 2016, when his contract ends.
It has always been our priority to ensure stable, long-term leadership for the company, and these appointments achieve that goal.
“Lachlan and James are each talented and accomplished executives and together, we, as shareholders and partners, will strive to take our company to new levels of growth and opportunity at a time or dynamic change in our industry.”
-Rupert Murdoch, Twenty-First Century Fox executive co-chairman
JPMorgan wins dismissal of shareholder lawsuit over London Whale
JPMorgan Chase officials including company CEO Jamie Dimon do not have to face a shareholder lawsuit claiming they failed to properly investigate the “London Whale” trading scandal that caused $6.2 billion in losses, according to New York’s 2nd U.S. Circuit Court of Appeals.
A lower court judge did not abuse his discretion by dismissing the lawsuit by shareholder Ernesto Espinoza, according to the court.
Espinoza did not meet the high standard of showing the board committed “gross negligence” in probing the losses and deciding not to sue people who were involved, according to Chief Judge Robert Katzmann.
The lawsuit claimed that JPMorgan could have prevented the losses incurred in 2012 by Bruno Iksil, or failed to properly hold others responsible.
Iksil was known as the London Whale because of the size of his derivative bets, which caused losses in JPMorgan’s chief investment office. The bank still faces a separate shareholder lawsuit over Iksil’s losses.
“Naturally, we’re disappointed with the outcome.”
-George Aguilar, Espinoza’s lawyer
Espinoza might ask the full appeals court to review the decision, according to Aguilar.
JPMogan’s probe into the scandal and how to prevent a recurrence was inadequate, according to Espinoza.
The New York-based bank’s board ignored his demands that it examine whether JPMorgan publicly downplayed the losses, according to Espinoza, including when Dimon called media reports a “tempest in a teapot,” and that it claw back salaries and bonuses from those responsible for the losses.
U.S. District Judge George Daniels dismissed the complaint in March 2014, finding no proof that the board acted improperly.
JPMorgan paid over $1 billion and admitted wrongdoing to settle U.S. and British probes into the London Whale losses.
Javier Martin-Artajo and Julien Grout, two former JPMorgan traders, are charged with hiding losses linked to Iksil. The French national is cooperating with prosecutors.