Drugstore.com buys SkinStore.com

12/29/2009

BELLEVUE, Wash. Drugstore.com announced Tuesday that it has agreed to acquire Salu, which includes, most notably, SkinStore.com, an online retailer of clinical skin care and beauty products, in a deal valued at some $36 million.

The deal enables Drugstore.com to reach three distinct beauty segments through the various sites it operates, including 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, the company stated.

"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, chairman and CEO, Drugstore.com. "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 agreement, Salu will continue to focus on its brands and exceptional customer experience and will operate in Sacramento, California. Additionally, Salu also has a distribution business in Australia and also operates Spalook.com, the online store for Sandow Media, which owns NewBeauty Magazine.

"This partnership is a tremendous opportunity to leverage each other's strengths and together become a clear leader in online beauty," added Jim Steeb, CEO, Salu. "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."

Drugstore.com will use a combination of half-cash/half-stock to fund the purchase.

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