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8-K - FORM 8-K - WALGREEN CO | c63690e8vk.htm |
Exhibit 99.1
News From |
Contact:
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For Walgreens | For drugstore.com | ||
Media: | Brinlea Johnson | |||
Michael Polzin | (212) 331-8424 | |||
(847) 315-2920 | brinlea@blueshirtgroup.com | |||
michael.polzin@walgreens.com | ||||
Investors: | ||||
Rick Hans, CFA | ||||
847-315-2385 | ||||
rick.hans@walgreens.com |
FOR IMMEDIATE RELEASE
|
http://news.walgreens.com | |
www.drugstore.com |
Walgreens to Acquire Online Retailer drugstore.com, inc.
Acquisition advances Walgreens position as most convenient multi-channel retailer in
America for health and daily living needs
America for health and daily living needs
DEERFIELD, Ill., and BELLEVUE, Wash., March 24, 2011 Walgreen Co. (NYSE, NASDAQ: WAG) and
online retailer drugstore.com, inc. (NASDAQ: DSCM) today announced a definitive merger agreement
pursuant to which Walgreens will acquire drugstore.com in a transaction with a total enterprise
value of approximately $409 million.
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 Walgreens President and
CEO Greg Wasson. This acquisition offers a unique opportunity that will provide us immediate
access to more than 3 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. Importantly,
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drugstore.coms well-recognized presence in the health, personal care, beauty and vision
categories, including such strong websites as drugstore.com, Beauty.com, SkinStore.com and
VisionDirect.com, will complement and extend many of our own multi-channel initiatives that have
been driving growth in our business. As a result, we are positioned better than ever to be the
most convenient multi-channel retailer of health and daily living needs in America offering
customers what they want, when they want it and where they want it.
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. The price per
share is a premium of approximately 102 percent over drugstore.coms 30-day average closing stock
price, and a premium of approximately 113 percent over the closing price of drugstore.coms common
stock on March 23, 2011, the last trading day prior to todays announcement.
Consummation of the merger is subject to customary conditions, including satisfaction of
regulatory requirements and approval of the transaction by drugstore.coms stockholders.
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.coms board
of directors, and drugstore.coms board recommends that the companys stockholders vote in favor
of the transaction.
We believe the acquisition of drugstore.com by Walgreens is a great fit for all of our
constituencies, said Dawn Lepore, drugstore.com CEO and Chairman. drugstore.com benefits from
this transaction by joining the largest and most trusted drugstore chain in the U.S. Our growth
strategies are perfectly aligned, and Walgreens will be able to accelerate and expand the
investments necessary to achieve our vision and growth opportunities. Our goal consistently has
been to create value for our customers, employees and shareholders. We believe we have made
significant progress over the last six years and built an organization with a broad and deep bench
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of Internet experience. The opportunity to become a part of Walgreens is the right next step in
this journey.
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.coms 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.
Walgreens President of E-commerce Sona Chawla said, This is a very exciting time for the
Walgreens e-commerce business as we expand and build our multi-channel capabilities for a $67
billion sales company with the best and most convenient store network in America. drugstore.com
significantly accelerates our multi-channel initiatives by expanding our product selection for our
customers, adding new capabilities through their well-known beauty and skin care websites, and
joining their talented team with our strong and growing e-commerce organization. Over the past
two years, weve established the infrastructure from which to grow our multi-channel products and
services, and by combining drugstore.coms 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 transaction is consistent with Walgreens previously outlined capital allocation objectives,
which include investing in strategic opportunities that reinforce the companys core strategies
and meet return requirements.
The company anticipates the transaction to be dilutive to earnings per share in the fourth quarter
of fiscal 2011 by approximately 3 cents due to transaction-related one-time costs. Based on
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Walgreens intention to reinvest in the business, the company further anticipates the transaction
to be dilutive to earnings per share by 3 to 4 cents in fiscal 2012, and 1 to 2 cents in fiscal
2013. Approximately 1 cent of the anticipated annual dilution per share is due to the estimated
impact of incremental amortization based on Purchase Accounting assumptions. The company also
anticipates an approximately $80 million present value cash flow benefit associated with the
assumption of drugstore.coms net operating losses and other tax related benefits.
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.coms websites.
drugstore.com was founded in 1998 with a mission to serve the health, beauty and wellness consumer
with selection, convenience, information and personal service. The web store was launched on Feb.
24, 1999.
Credit Suisse Securities (USA) LLC acted as financial advisor to Walgreens in the transaction, and
the law firms of Sidley Austin LLP and Weil Gotshal & Manges LLP served as legal counsel for
Walgreens. Allen & Company LLC and Sonenshine Partners LLC acted as financial advisors to
drugstore.com. The law firm of Wilson Sonsini Goodrich & Rosati, Professional Corporation served
as legal counsel to drugstore.com.
About Walgreens
Walgreens (www.walgreens.com) is the nations largest drugstore chain with fiscal 2010 sales of
$67 billion. The company operates 7,689 drugstores in all 50 states, the District of Columbia and
Puerto Rico. Each day, Walgreens provides nearly 6 million customers the most convenient,
multi-channel access to consumer goods and services and trusted, cost-effective pharmacy, health
and wellness services and advice in communities across America. Walgreens scope of pharmacy
services includes retail, specialty, infusion, medical facility and mail service, along
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with respiratory services. These services improve health outcomes and lower costs for payers
including employers, managed care organizations, health systems, pharmacy benefit managers and the
public sector. Take Care Health Systems is a Walgreens subsidiary that is the largest and most
comprehensive manager of worksite health centers and in-store convenient care clinics, with more
than 700 locations throughout the country.
About drugstore.com, inc.
drugstore.com, inc. is a leading online retailer of health, beauty, clinical skincare, and vision
products. Our portfolio of brands includes: drugstore.com, Beauty.com, SkinStore.com and
VisionDirect.com. All provide a convenient, private and informative shopping experience, while
offering a wide assortment of approximately 60,000 non-prescription products at competitive
prices.
The drugstore.com pharmacy service, in association with BioScrip Pharmacy Services, Inc., is
certified by the National Association of Boards of Pharmacy (NABP) as a Verified Internet Pharmacy
Practice Site (VIPPS) and complies with federal and state laws and regulations in the United
States.
Additional Information about the Transaction
This press release is not, and is not intended to be, a solicitation of proxies or an offer of
securities. drugstore.com plans to file with the SEC and mail to its stockholders a Proxy
Statement in connection with the transaction. The Proxy Statement will contain important
information about Walgreens, drugstore.com, the transaction and related matters. Investors and
security holders are urged to read the Proxy Statement carefully when it is available. Investors
and security holders will be able to obtain free copies of the Proxy Statement and other documents
filed with the SEC by drugstore.com through the website maintained by the SEC at www.sec.gov and
by contacting drugstore.com Investor Relations at (212) 331-8424. In addition, investors and
security holders will be able to obtain free copies of the documents filed with the SEC on
drugstore.coms website at www.drugstore.com.
Participants in the Acquisition of drugstore
drugstore.com and its directors and officers and certain other members of management and employees
may be deemed to be participants in the solicitation of proxies from its stockholders in
connection with the Transaction. Information regarding these persons who may, under the rules of
the SEC, be considered participants in the solicitation of drugstore.coms stockholders in
connection with the proposed transaction will be set forth in the Proxy Statement described above
when it is filed with the SEC. Additional information regarding drugstore.coms executive officers
and directors is included in drugstore.coms definitive proxy statement, which was filed with the
SEC on April 30, 2010. You can obtain free copies of this document from drugstore.com using the
contact information above.
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Forward-Looking Statements
Information set forth in this press release contains forward-looking statements, which involve a
number of risks and uncertainties. These statements include those regarding the closing of the
transaction and the expected timing thereof and the potential effects of the acquisition. These
statements are not guarantees of future performance and are subject to risks, uncertainties and
assumptions that could cause actual results to vary materially from those indicated, including: the
ability to obtain regulatory approvals of the transaction on the proposed terms and schedule; the
failure of drugstore.coms stockholders to approve the transaction; the risk that the businesses
will not be integrated successfully; the risk that the cost savings and any other synergies from
the transaction may not be fully realized or may take longer to realize than expected; disruption
from the transaction making it more difficult to maintain relationships with customers, employees
or suppliers; competition and its effect on pricing, spending, third-party relationships and
revenues; and other factors described in Walgreens Annual Report on Form 10-K for the year ended
August 31, 2010, drugstore.coms Annual Report on Form 10-K for the year ended January 2, 2011 and
their respective subsequent SEC filings, which risks and uncertainties are incorporated herein by
reference. You are cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Except to the extent required by law, Walgreens
and drugstore.com disclaim any obligation to update any forward-looking statements after the
distribution of this press release, whether as a result of new information, future events, changes
in assumptions, or otherwise.
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