UPDATE 3-Walgreen CEO leaves after 26 years

* Chairman and CEO leaves company abruptly

* Company searching for permanent CEO

* Walgreen shares hit lowest level since March 2000 (Adds Advisory Research, analyst comment, updates stock move)

By Jessica Wohl

CHICAGO, Oct 10 (Reuters) - Walgreen Co (WAG.N) Chairman and Chief Executive Jeffrey Rein abruptly left the company on Friday, just two days after the drugstore chain withdrew a failed bid for Longs Drug Stores Corp LDG.N.

The company called the departure of Rein, 56, a retirement.

"This is not related to the Longs proposal," a company spokesman said. He declined to comment further on Rein's exit, which is effective immediately.

Rein was a longtime employee who joined Walgreen as an assistant store manager in 1982, eventually making his way to the CEO post in July 2006. He added the role of chairman in July 2007.

Alan McNally, 62, the lead director of the Walgreen board, was named chairman and acting CEO. McNally has been on the board since 1999.

Shares of Walgreen fell along with a broad stock market sell-off. At one point, the shares plunged more than 11 percent to hit their lowest level since March 2000.

"There's a lot of longevity with management, so any time you see something like this from a company like Walgreen it is a little bit surprising, even though there's clearly been some struggles lately," said Morningstar analyst Mitchell Corwin.

Rein's departure comes after other recent shake-ups. Walgreen added a chief marketing officer in September, brought in a senior vice president of e-commerce in June and hired a new chief financial officer in May, when it promoted its then-CFO to the new role of chief risk officer.

The company has also started speaking to investors more often. Walgreen began holding quarterly conference calls in December 2007, two months after it posted an unexpected fourth-quarter profit decline. It is also holding an investor meeting on Oct. 30.

SO LONG TO LONGS

For years, Walgreen grew mainly by opening more stores. It became more acquisitive once Rein joined the top ranks. Since then, it has scooped up pharmacy-related companies such as clinic operator Take Care Health Services and the Delaware-based pharmacy chain Happy Harry's.

In July, it slowed its rapid, decade-long push to open new stores, cutting its goal for annual new store growth to 5 percent by fiscal 2011 from a target of about 8 percent.