June 3, 2011, 4:27 PM

Walgreen finalizes its takeover of Drugstore.com

The final total value of the deal was $409 million.

Lead Photo

The days of Drugstore.com as an independent web-only merchant are officially over.

Walgreen Co., No. 73 in the Internet Retailer Top 500 Guide, has now completed its acquisition of Drugstore.com, No. 46. Walgreen announced it would acquire Drugstore.com in a deal valued at about $409 million in March.

“Drugstore.com complements Walgreens center of gravity—our 7,700 drugstores―by extending many of our own multichannel initiatives that have been driving our growth,” says CEO Greg Wasson. “This acquisition also provides us a unique opportunity to access more than 3 million savvy, online loyal customers, and 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."

Walgreen president of e-commerce Sona Chawla will take responsibility for Drugstore.com and its subsidiary e-commerce sites, Beauty.com and SkinStore.com. Those sites will remain in operation. Over time, the Drugstore.com assets will be integrated with the Walgreen operation, the drugstore chain says. Drugstore.com CEO Dawn Lepore, who is eligible for a severance package that would pay her a base of about $2.8 million and another $3.5 million in stock options and other compensation, will serve as a strategic advisor to Chawla during a transition period, says Walgreen.

“Drugstore.com will maintain separate branding of its web sites,” says Walgreen. “Over the long term, Walgreens will fully integrate the two businesses and intends to enhance its multichannel product assortment and the overall customer experience by leveraging Drugstore.com’s current web sites.”

For the first quarter ended April 3, Drugstore.com reported:

  • Sales increased 15.8% to $128.4 million from $110.9 million in the first quarter of 2010.
  • Net loss was $3.2 million compared with a net loss of $2.6 million in the first quarter of 2010. The net loss included $2.2 million in acquisition-related expenses, the retailer says.
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