24/7 Wall St. » DSCM

M&A Daily: Is Drugstore.com Worth the Price? (WAG, CHSI, DSCM)

Administrator — Thu, 24 Mar 2011 16:27:48 +0000

It was not that long ago that Walgreen Co. (NYSE: WAG) sold off its PBM unit to Catalyst Health Solutions, Inc. (NASDAQ: CHSI). The deal was valued around $525 million, and now Walgreen has turned around in very short order by announcing a $429 million cash buyout of Drugstore.com Inc. (NASDAQ: DSCM). Was it worth it?

Walgreen recently was not exactly given a huge endorsement by investors after earnings earlier this week. The $37 billion company can of course afford to make this deal at whatever price it chose to. After all, $37 billion versus $429 million sounds like a line-item. At issue is that the buyout came at more than a 100% premium to Wednesday’s closing price.

Drugstore.com’s board has approved the deal and the old prices north of $50.00 from the old dot-com bubble days are ancient history. This stock has not really traded above $4.00 during the last five years.

It seems that Walgreen is buying the domain names here rather than just the standalone business. The few analysts that follow Drugstore.com have revenue estimates at $529.6 million for 2011 and $613.4 million for 2012 versus more than $70 billion a year for Walgreen. Along with the Drugstore “dot-com” domain, other domains owned by the target company are VisionDirect, SkinStore, and Beauty “dot-com” sites. This deal is on top of a fairly recent Walgreen acquisition of Duane Reade for its New York presence.

Where this gets interesting is that Drugstore “dot-com” has a much larger value inside a company like Walgreen that it does on its own. Walgreen has far deeper pockets and it has a much larger platform that is there to be leveraged immediately. If this was a private equity firm making the acquisition it may make little sense at all. If it is Walgreen making a bolt-on acquisition, then the deal makes easy sense.

Drugstore shares are up 111% at $3.78 and Walgreen shares are up 1.3% at $40.35.

JON C. OGG

Filed under: Drug companies, Mergers and Buy Outs, Retail Tagged: CHSI, DSCM, WAG

Top Active Trader Alert Stocks (CSUN, DSCM, MU)

247wallst — Thu, 24 Mar 2011 12:52:49 +0000

Active traders and day traders have many stocks to choose from this Thursday morning. We are tracking news and moves in shares of China Sunergy Co., Ltd. (NASDAQ: CSUN), Drugstore.com, Inc. (NASDAQ: DSCM), and Micron Technology, Inc. (NASDAQ: MU).

China Sunergy Co., Ltd. (NASDAQ: CSUN) is up 15% before market open to $4.56, relative to a 52-week range of $3.40-$4.99. The company posted 4Q earnings above street expectations.

Drugstore.com, Inc. (NASDAQ: DSCM) is up 112% premarket on heavy volume to $3.81, near a 52-week high of $3.95. Walgreen has agreed to buy the website company for $429 million.

Micron Technology, Inc. (NASDAQ: MU) is up 6.5% premarket to $11.30, relative to a 52-week range of $6.36-$11.95. The company released a positive 2Q report.

Filed under: Pre-Market Activity, Trading Alert Tagged: CSUN, DSCM, MU

Top Analyst Upgrades (ALNY, DB, DSCM, ZEUS, SEPR, X, YHOO)

247wallst — Wed, 10 Jun 2009 11:58:15 +0000

These are some of the top pre-market analyst upgrades and positive research calls we have seen from Wall Street research calls early this Wednesday morning:

Alnylam (ALNY) Started as Buy at Jefferies and at Roth.
Deutsche Bank (DB) Raised to Neutral at JPMorgan.
Drugstore.com (DDSCM) Started as Buy at Janney Montgomey Scott.
Olympic Steel (ZEUS) Raised to Buy at KeyBanc.
Sepracor (SEPR) Started as Buy at Sun Trust Robinson Humphrey.
US Steel (X) Raised to Buy at KeyBanc.
Yahoo! (YHOO) Raised to Buy at Soleil.

JON C. OGG

Posted in Analyst Calls Tagged: ALNY, DB, DSCM, SEPR, X, YHOO, ZEUS

Top 10 Pre-Market Analyst Calls (AFFX, C, DIS, DSCM, GSIC, JBLU, PNRA, UN, UNTD, DVN, KWK, NFX, EOG, FTO)

247wallst — Fri, 14 Dec 2007 08:19:16 +0000

These are not the only important analyst calls out there, but these are the top analyst calls that 24/7 Wall St. is focusing on:

Affymetric (AFFX) raised to Buy at UBS.
Citigroup (C) saw its Debt rating cut from Aa2 to Aa3 and financial strength cut from A to B at Moody’s based on capital ratios.
Disney (DIS) raised to Buy at UBS.
Drugstore.com (DSCM) started as Buy at Banc of America.
GSI Commerce (GSIC) cut to Hold at Jefferies.
Jetblue Airways (JBLU) raised to Peer Perform at Bear Stearns.
Panera Bread (PNRA) Cut to Neutral at Sun Trust Robinson Humphreys.
Unilever (UN) started as Buy at Banc of America.
United Online (UNTD) raised to Buy at Jefferies.
Credit Suisse makes downgrades in oil patch: Devon (DVN), EOG Resources (EOG), Frontier (FTO), Newfield Exploration (NFX), Quicksilver (KWK).

Jon C. Ogg
December 14, 2007

Media Digest 10/23/2007 Reuters, WSJ, NYTimes, FT, Barrons’

247wallst — Tue, 23 Oct 2007 03:12:54 +0000

According to Reuters, Apple’s (AAPL) rose 67% in the last quarter/

Reuters writes that the UAW has a secret deal with Chrysler to make certain products in the US in the hope of getting its contract ratified.

Reuters reports that Microsoft (MSFT) has launched mobile software to compete with RIM (RIMM) in the smartphone business.

Reuters writes that profits rose at Texas Instruments (TXN) but its forecast disappointed.

The Wall Street Journal writes the News Corp’s (NWS) is going to launch a games section for its social network MySpace.

The Wall Street Journal writes that BP’s (BP) earnings fell 29% on low margins and refinery shutdowns.

The Wall Street Journal writes that AT&T’s (T) fiber TV network went down last week.

The New York Times writes that Dell (DELL) will begin to sell products at Staples.

The FT writes that Nike (NKE) is launching a bid for UK shoe company Umbro.

Barron’s writes that Drugstore.com (DSCM) gained on improved forecasts.

Barron’s writes that Apple is guiding to a $9.2 billion quarter for the last period of the calendar year.

Douglas A. McIntyre