Web-Based Drugstore Acquisition A Risky Move
Drugstore.com has not shown a profit in more than 10 years
It was announced today that Walgreen is going to take a huge leap of faith and take over drugstore.com, one of the top three online beauty and health vendors nationwide, but one that has not shown a surplus in revenue in over 10 years.
Walgreen however seems confident the deal, which brings more than 2.9 million online consumers with it, will help their pooronline presence and boost overall sales.
Most analysts agree that for vendors such as Walgreen, it is crucial to have a strong internet existence in order to survive in the future.
Patricia A. Baker, a money analyst said, “People are shifting their behaviors. The brick-and-motor store’s not going to die, but it’s certainly going to be augmented by the convenience of being able to shop for stuff online.”
The deal, which is reported at more than $400 million, has been approved by drugstore.com’s board, but not its shareholders
yet, is being questioned by business experts who don’t know if Walgreen will be able to make good on its investment.
Matthew Coffina, a business expert who thinks the take over is highly questionable, because it has yet to be made clear how Walgreen will get a return on its investment stated, “The question is how much money can you make when you’re selling low-end drugstore-type products and have to pay shipping costs on that. There’s not a huge value proposition there, I don’t think.”
At this point drugstore.com looks to be getting the better end of the lollipop, with its stock holders getting paid more than $3.79 a share, which is more than twice its value of $1.78.
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