Walgreens Buys drugstore.com, Is This The Start Of A Trend?

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Walgreen’s has announced it will acquire drugstore.com for roughly $409 million dollars. I have to say that I really like this move, Walgreens gets an asset that fits well into its current operations and supply chain for a great value and they used cash on hand to do it. This also represents a bit of vision on Walgreen’s part as far as being out in front of what I think is a rapid merging of traditional brick and mortar businesses and online operations. When you think about it from a strategic standpoint its brilliant, you can acquire valuable assets in your current line of business that more than likely already has solid operations and as an online-only retailer probably has very low overhead to start. Even better is that these smaller online-only acquisitions don’t raise the kind of regulatory flags as traditional acquisitions do and tend to close much faster. Amazon.com showed the same kinds of foresight earlier this year when it acquired soap.com and all its brands and Zappo’s before that. This is a smart, cheap and effective approach to acquisition if you can make the right moves.

Under the terms of the merger agreement, drugstore.com stockholders will receive $3.80 in cash for each share of stock, which represents an equity value of approximately $429 million. Walgreens will fund the acquisition with existing cash and anticipates the merger will close by the end of June 2011. The definitive agreement was unanimously approved by drugstore.com’s board of directors, and drugstore.com’s board recommends that the company’s stockholders vote in favor of the transaction.

With more than $456 million in sales in 2010, drugstore.com is ranked as the eighth-largest e-tailer in the U.S. according to Internet Retailer magazine. Walgreens will maintain drugstore.com’s corporate office in Bellevue, Wash., after the transaction is completed. drugstore.com employs approximately 1,000 people at its offices, call center and distribution centers.

As a result of the merger, Walgreens will acquire the drugstore.com website in addition to other websites operated by the company. drugstore.com will maintain separate branding of its websites after the transaction closes. Over the long term, Walgreens intends to enhance its multi-channel product assortment and the overall customer experience by leveraging drugstore.com’s websites.

 

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Lorenzo Winfrey

Lorenzo Winfrey

Editor-In-Chief at ZoKnowsGaming
I am the Co-Ceo of DLT Digital Media. We are a company that is focused on developing new and innovative web properties in addition to developing WordPress based web sites for others. But before I was all that, I was a gamer.
Lorenzo Winfrey