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Rite Aid in online pact
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June 22, 1999: 10:29 a.m. ET
Will link up with drugstore.com, General Nutrition in e-pharmacy
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NEW YORK (CNNfn) - No. 3 drugstore chain Rite Aid Corp. and vitamin retailer General Nutrition Centers Inc. said Tuesday they will invest $10 million in upstart drugstore.com Inc. in a deal that will boost the online pharmacy's prescription drug services.
Camp Hill, Pa.-based Rite Aid -- third behind Walgreen Co. (WAG) and CVS Corp. (CVS) in the United States, and Pittsburgh-based GNC (GNCI) -- said they will fold their previously announced electronic commerce venture and nutrition information service into drugstore.com, an Internet start-up that counts Amazon.com Inc. (AMZN) among its backers.
Shares in both Rite Aid and General Nutrition rose in early trading Tuesday. Rite Aid rose 1-3/16 to 26-1/4, while GNC was up 1-7/16 at 21-1/2.
Rite Aid will invest $7.6 million in cash for a 25.3 percent stake in drugstore.com, while GNC will own 8 percent with a $2.4 million investment. Drugstore.com will also receive exclusive marketing commitments and other benefits that the companies said far exceeded the cash portion of the deal.
"This alliance joins key players from the online pharmacy space, the retail drugstore setting and the wellness and nutrition category," said Peer Neupert, president and CEO of drugstore.com.
Under the terms of the 10-year pact, customers who go to Rite Aid's Web site to fill prescriptions will be directed to the drugstore.com service. Customers will be able to receive their medicine through the mail or pick it up at Rite Aid stores.
The companies also said the deal will broaden drugstore.com's ability to serve customers with insurance reimbursement plans that cover their medications.
The new drugstore.com should launch by this fall, the companies said. The deal is subject to regulatory clearance under the Hart-Scott-Rodino Antitrust Improvements Act.
Drugstore.com, based in Bellevue, Wash., opened its virtual doors in February. Billionaire investor and Microsoft Corp. co-founder Paul Allen recently announced plans to invest in the company.
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Drugstore.com
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