Lumira portfolio company SkinStore.com Agrees to be Acquired by drugstore.com, inc.

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BELLEVUE, Wash., Dec. 28, 2009 (GLOBE NEWSWIRE) — drugstore.com, inc. (Nasdaq:DSCM – News), a leading online retailer of health, beauty, vision, and pharmacy products that owns and operates the Beauty.com(TM) webstore, today announced that it has entered into an agreement to acquire Salu, Inc. in a stock and cash transaction. Salu owns and operates the SkinStore.com(TM) webstore, a leading online retailer of clinical skin care and beauty products. Additionally, Salu has distribution capabilities in Australia and operates the spalook.com(TM) webstore for Sandow Media, parent company of NewBeauty Magazine. In 2009, Salu is expected to generate at least $40 million of revenue, $500,000 of net income and $1.4 million of adjusted EBITDA, excluding one-time transaction-related charges.  
 
The acquisition will create one of the largest online beauty retailers offering consumers a wide-ranging product selection, with mass beauty products on drugstore.com, prestige beauty brands on Beauty.com and clinical skin care products on SkinStore.com. Together, the companies will have a broader array of products to offer across their online stores and will gain efficiencies in many operational areas. Under the agreement, Salu will continue to focus on its brands and exceptional customer experience and will operate in Sacramento, California.  
 
“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,” said Dawn Lepore, CEO and chairman of the board, drugstore.com, inc. “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.”  
 
Under the terms of the agreement, the transaction is valued at $36 million payable half in cash and half in drugstore.com common stock, plus an opportunity for senior management of Salu to receive an additional amount based on achievement of certain performance targets and integration milestones.  
 
“This partnership is a tremendous opportunity to leverage each other’s strengths and together become a clear leader in online beauty,” said Jim Steeb, CEO, Salu, Inc. “We will continue to build the SkinStore brand and our partnership with spalook and to serve our customers well. We believe drugstore.com along with Beauty.com, is the best partner to help us do this over the long term.”  
 
The acquisition is expected to be accretive to drugstore.com, inc. earnings per share in 2010, excluding one-time transaction fees and integration costs. drugstore.com, inc. expects to record approximately $2.4 million to $2.9 million of transaction and integration related expenses in fiscal year 2010. The transaction is expected to close in the first quarter of fiscal 2010. 
 
About drugstore.com, inc.  
drugstore.com, inc. (Nasdaq:DSCM – News) is a leading online retailer of health, beauty, vision and pharmacy products. Our portfolio of brands include: drugstore.com(TM), Beauty.com(TM) and VisionDirect.com(TM). All are accessible from http://www.drugstore.com and provide a convenient, private, and informative shopping experience while offering a wide assortment of more than 45,000 products at competitive prices.  
 
The drugstore.com pharmacy is certified by the National Association of Boards of Pharmacy (NABP) as a Verified Internet Pharmacy Practice Site (VIPPS) and operates in compliance with federal and state laws and regulations in the United States.  
The drugstore.com, inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6419  
 
About Salu, Inc.  
Salu, Inc. is the parent company of SkinStore.com, physician founded and directed since 1997. SkinStore.com carries over 200 premium brands of skin care and beauty products typically found only in luxury spas, fine stores and dermatologist offices. An aesthetician-staffed call center is available to answer customer questions. The privately-owned venture-funded company is headquartered in Gold River (Sacramento), California.  
 
Additional information  
This announcement was issued on December 28, 2009. In connection with the proposed acquisition, drugstore.com has filed a current report on Form 8-K dated December 27, 2009 with the SEC. The Form 8-K is available at www.sec.gov or at www.investor.drugstore.com.