Bricks buys clicks: Walgreens acquires Drugstore.com for $409 million

Summary:Drugstore chain Walgreen Co. acquired Drugstore.com in a deal valued at $409 million. The move highlights how traditional retailing and e-commerce are ultimately becoming one.

Drugstore chain Walgreen Co. acquired Drugstore.com in a deal valued at $409 million. The move highlights how traditional retailing and e-commerce are ultimately becoming one with mobile applications acting as the glue between the two channels.

The plan for Walgreens is to take Drugstore.com's online presence and sites like Beauty.com, SkinStore.com and VisionDirect.com and cross pollinate customers offline and online. Drugstore.com brings 3 million customers to Walgreens.

In a statement, Walgreens CEO Greg Wasson said the deal "will complement and extend many of our own multi-channel initiatives."

Under the terms of the deal, Drugstore.com shareholders will get $3.80 in cash. Drugstore.com ended 2010 with $456 million in sales. Walgreens has $67 billion in annual sales. Walgreens said the acquisition will hit fourth quarter earnings by 3 cents a share due to one-time costs. In 2012, Drugstore.com will result in a hit of 3 cents to 4 cents a share because Walgreens intends to invest in the business.

Drugstore.com will maintain separate branding, but Walgreens will use its supply chain heft to bolster the assortment. Many retailers such as Target, Barnes & Noble and others see e-commerce as the growth engine for years to come.

Drugstore.com launched its store in early 1999 and went public later only to be hit by the dot-com bust. The stock chart tells the tale dating back to Drugstore.com's IPO tells the tale.

Today is a much happier ending for Drugstore.com shares, which are up 113 percent in premarket trading.

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Topics: Legal, Banking, Browser, E-Commerce, Enterprise Software

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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