December 28, 2009, 12:00 AM

Drugstore.com agrees to acquire beauty products e-retailer

Drugstore.com Inc. has agreed to acquire Salu Inc., owner of online beauty retailer SkinStore.com, in a stock-and-cash deal valued at $36 million. The acquisition is aimed at creating one of the largest online skin-care and beauty-products retailers.

Drugstore.com Inc. has agreed to acquire Salu Inc., owner and operator of online beauty retailer SkinStore.com, in a stock-and-cash deal valued at $36 million. The acquisition is aimed at making Drugstore.com one of the largest web-based skin-care and beauty-products retailers, the e-retailer says.

Salu, which also distributes in Australia and operates e-commerce site spalook.com for Sandow Media, is expected to generate at least $40 million in revenue and $1.4 million in adjusted earnings this year, Drugstore.com says.

Drugstore.com says it will pay Salu half in cash and half in stock, and that the deal is expected to close in the first quarter of 2010. Salu senior executives will also be eligible for additional rewards based on performance targets and integration milestones, says Drugstore.com.

"Beauty is a cornerstone of our growth strategy, and we are delighted to expand our footprint with the addition of SkinStore.com to our online portfolio," says Dawn Lepore, CEO and chairman of Drugstore.com, No. 48 in the Internet Retailer Top 500 Guide (a PDF version of the company’s financial and operating profile can be ordered by clicking on its name). "This acquisition will further solidify our position as a first choice for beauty consumers and brings us one step closer toward achieving our goal of becoming the leading online retailer of beauty and spa products."

Drugstore.com expects $2.4 million to $2.9 million in transaction and integration expenses next year from the deal.

Drugstore.com is No. 220 in the Internet Retailer Top 500 Guide (a PDF version of the company’s financial and operating profile can be ordered by clicking on its name).

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