Drugstore.com to buy SkinStore and Spalook Web site operator for $36 million in cash and stock

Drugstore.com will buy Salu Inc. for $36 million

BELLEVUE, Wash. — Online health and beauty retailer Drugstore.com Inc. said Monday it will buy Salu Inc., the operator of SkinStore.com, for $36 million.

Drugstore.com said the deal will make it one of the largest online beauty retailers. Salu’s SkinStore.com Web site sells skin care and beauty products, and the company also runs the spalook.com online store and distributes products in Australia.

The purchase will be funded with $18 million in cash and $18 million in stock, and the deal is expected to close during the first quarter of 2010.

Drugstore.com expects the deal to add to its profit in 2010, excluding one-time transaction and integration costs of an estimated $2.4 million to $2.9 million.

Drugstore.com said Salu will generate about $40 million in revenue and $500,000 in profit this year. In the first nine months of 2009, Drugstore.com reported a profit of $246,000 on revenue of $297.5 million.

In addition to Drugstore.com, the company runs sites including Beauty.com and VisionDirect.com. In afternoon trading, its shares rose 10 cents, or 3.1 percent, to $3.34.