Walmart Inc. (NYSE:WMT) disclosed today that it has reached a settlement agreement to resolve certain shareholder derivative actions related to the company's handling of prescription opioids. The settlement, which is awaiting court approval, involves no admission of liability by Walmart or the defendants, who have expressly denied any wrongdoing.
The legal actions in question include a derivative action filed by three shareholders in the Delaware Court of Chancery and two other actions in the U.S. District Court for the District of Delaware. These cases alleged breaches of fiduciary duties by certain current and former directors and officers of Walmart, specifically in relation to the distribution and dispensing of prescription opioids.
As part of the resolution, Walmart's insurance carriers will pay the company $123 million, minus any attorneys' fees and litigation expenses awarded by the court to the plaintiffs' counsel. Additionally, Walmart has agreed to maintain specific corporate governance practices for at least five years.
The agreement follows an investigation by a special litigation committee formed by Walmart's Board of Directors on May 5, 2023, to review the claims made in the derivative actions. The proposed terms are detailed in the Stipulation and Agreement of Settlement, Compromise, and Release, which is now available for review on the Investor Relations section of Walmart's website.
The settlement is intended to release the company and the individual defendants from any potential derivative claims. The Delaware Court of Chancery is set to review and potentially approve the settlement. Walmart has issued this information in compliance with a court order and the details of the proposed settlement, including the Notice of Pendency of Derivative Action and the Settlement Agreement, are attached to the company's SEC filing as Exhibits 99.1 and 99.2.
In other recent news, Walmart has been the focus of multiple financial reports. TD Cowen reaffirmed its Buy rating for Walmart, citing the company's innovative technology and new revenue streams through WMT Luminate and WMT Connect. KeyBanc Capital Markets and Oppenheimer have both raised their price targets for Walmart, attributing it to the company's growth in the grocery sector and its U.S. e-commerce sales growth.
BofA Securities also increased its price target for Walmart, noting the company's early holiday deals and "inflation-free" meal promotions. Piper Sandler maintained an Overweight rating on Walmart, based on a Teen Survey indicating a strong brand perception among upper-income families.
However, Walmart's Mexican subsidiary, Walmex, is under scrutiny by Mexico's antitrust authority, Cofece, for allegations of anti-competitive behavior. The company is also expanding its pet care services in southern states and working towards sustainability targets with Unilever (LON:ULVR).
InvestingPro Insights
As Walmart navigates this legal settlement, it's worth noting some key financial metrics that underscore the company's robust market position. According to InvestingPro data, Walmart boasts a substantial market capitalization of $653.43 billion, reflecting its status as a retail giant. The company's revenue for the last twelve months stands at an impressive $665.03 billion, with a healthy revenue growth of 5.43% over the same period.
InvestingPro Tips highlight Walmart's strong dividend history, having raised its dividend for 29 consecutive years and maintained payments for 52 years. This consistent dividend policy may provide some reassurance to shareholders in light of the recent legal challenges.
Additionally, Walmart's stock has shown remarkable performance, with a 52.25% total return over the past year and trading near its 52-week high. This suggests that investors remain confident in the company's prospects despite the opioid-related litigation.
For readers interested in a deeper analysis, InvestingPro offers 14 additional tips on Walmart, providing a comprehensive view of the company's financial health and market position.
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