Medicated Americans complaining about hefty prescription costs in this country can take heart. Sometimes the pharmacy chains have to pay up, too.
Do you think Walgreen could've gotten drugstore.com cheaper in Canada?
The $409 million transaction is going to turn heads. You have to go back nearly 11 years -- to the sudsier side of the dot-com bubble -- to find the last time that drugstore.com was trading in the double digits. It also closed yesterday mere pocket change from its 52-week low.
The fundamentals justify the pessimism before this morning's bailout. The Web-based retailer has missed Wall Street's profit targets in three of its past four quarters, posting losses in five of the past six quarters.
If Walgreen was in a bidding war a hefty premium would make sense, but who would it be up against? Rival pharmacies? Rite Aid's
I get it. Walgreen's move away from managing prescriptions and last year's Duane Reade acquisition signal a push back to retail. Why not overlook the iffy margins of a dot-com retailer for the sake of brisk existing sales and a killer generic domain name. Walgreen also posted a reasonable quarterly report this week that wasn't enough to please the market. If investors want more sizzle out of Walgreen, this morning's glitzy buy is one way to get there.
I'm just left wondering if it really had to pay that much and why corporate ambulance-chasing attorneys have the gall to argue that drugstore.com's board is actually selling itself cheap.
Do you think that Walgreen is overpaying for drugstore.com? Share your thoughts in the comment box below.