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.
A Chicago 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. Mushkin wrote.
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."