Walgreens in Deal to Acquire Drugstore.com
Walgreens announced yesterday that it had signed a definitive
agreement to acquire drugstore.com.
“Our acquisition of drugstore.com today significantly accelerates our
online strategy to leverage the best community store network in America by
becoming the most convenient choice for health and daily living needs whether
customers shop online or in our stores,” said Gregg Wasson, president
and CEO of Walgreens, in a press release.
Walgreens said it intends to continue
operating drugstore.com as a standalone business along with its Beauty.com,
SkinStore.com and VisionDirect.com sites.
“This acquisition offers a unique opportunity that will provide us immediate
access to more than three million savvy, online loyal customers, and will allow
us to move even closer to our existing customers through relationships with
new vendors and partners, adding approximately 60,000 products to our already
strong online offering,” said Mr. Wasson.
Walgreens President of E-commerce
Sona Chawla said, “Over the past two
years, we’ve established the infrastructure from which to grow our multi-channel
products and services, and by combining drugstore.com’s capabilities
we are well on our way to achieving our goal of becoming the most convenient
multi-channel retailer for health and daily living needs.”
The deal to
acquire drugstore.com comes on the heels of Walgreens’ announcement earlier
this month that it had reached a deal to sell its Walgreens Health Initiatives
pharmacy benefit manager (PBM) business to Catalyst Health Solutions.
Tribune article quoted a research report by Scott Mushkin of Jeffries & Company. “While
the acquisition will be slightly dilutive and will prevent Walgreens from using
the proceeds from the sale of its PBM for such things as share repurchases,
the company looks to be effectively exchanging a non-core PBM business with
one that strengthens and broadens Walgreens’ core area of expertise,” Mr.
Deborah Weinswig of Citi Group told MarketWatch that the
move would help strengthen Walgreens’ beauty business. “We believe this
was a void Walgreen needed to fill,” she said.
Morningstar analyst Matthew
Coffina was negative on the deal. He told Reuters, “I
think the online business is going to be very competitive and it is going to
be very difficult for anybody to get a competitive advantage.”
to Acquire Online Retailer drugstore.com – Walgreen Co.
- Walgreen’s online play – MarketWatch
- Walgreen to buy drugstore.com for $429 million – Reuters
- Walgreens to buy Drugstore.com for $400M – Chicago Tribune
Discussion Questions: What is your reaction to Walgreens’ acquisition of drugstore.com? What will it mean for competitors of the two companies?