Headline FeedsShares of leading drugstore chain Rite Aid (NYSE: RAD) and vitamin retailer General Nutrition Corporation (Nasdaq: GNCI) both climbed on Tuesday after the companies announced that they have invested in and formed a 10-year alliance with drugstore.com. Rite Aid stock rose 7/8 to 25-15/16, while GNC stock gained ¾ to 20-13/16.
Rite Aid will acquire a 25.3 percent stake in drugstore.com for $7.6 million, and GNC will buy an 8 percent stake for $2.4 million. Drugstore.com has filed for an initial public offering to raise as much as $67.5 million. If drugstore.com, which also has Amazon.com as a major investor, pulls off its IPO, it's going to be a hundred-million company, which means that Rite Aid and GNC are going to get a huge payoff for their investments.
Of course, there's the possibility that drugstore.com's isn't even worth as much as the money it's trying to raise in an IPO. Competitor Soma.com was acquired for $30 million by drugstore chain CVS last month. That deal could have been one heck of a comedown for drugstore.com's investors, who thought they had bought into a hundred-million dollar company. Taken at face value, Rite Aid's deal to buy about 1/4 of drugstore.com for $7.6 million puts its value in the same ballpark as Soma.com.
Stay tuned. This could get extremely interesting.
