06/22 09:15 Rite Aid and General Nutrition
Corporation Announce Strategic
RAD.N><GNCI.O>
Rite Aid and General Nutrition Corporation Announce Strategic Online
Partnership with drugstore.com
CAMP HILL, Pa. and PITTSBURGH, Pa.--(BUSINESS WIRE) --June 22,
1999--
Goal of Alliance Is To Combine Best of Online
and In-Store Shopping Experiences Creates Only Internet Site To Market the
Rite Aid Pharmacy, GNC Brands drugstore.com To Get Access To Rite Aid
Third-Party Prescription Plans
Rite Aid Corporation (NYSE, PSE: RAD), one of the nation's leading
drugstore chains and General Nutrition Centers, Inc., (GNC),
(NASDAQ:GNCI), the largest specialty retailer of vitamins and mineral
supplements in the U.S., announced today that they are partnering with
drugstore.com (www.drugstore.com) to offer customers an enhanced online
experience for health and wellness products.
The three companies said they have signed 10-year agreements that will: --
Offer customers the ability to order prescription drugs online
for delivery by mail or by same-day pickup at 3,800 Rite Aid
drugstores nationwide; -- Broaden drugstore.com's ability to provide
prescription
medications to customers with insurance reimbursement plans,
including immediate access to members of health plans served
by Rite Aid's wholly owned pharmacy benefits management
subsidiary, PCS Health Systems, Inc. (PCS); -- Quickly give Rite Aid and
GNC prominent presence in the Internet
drugstore and wellness business by folding the previously
announced co-branded Rite Aid/GNC Internet e-commerce and
nutritional information site into drugstore.com.
The agreements will become effective upon receipt of necessary
governmental clearances under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
As a result of the agreements, Rite Aid will own 25.3 percent of
drugstore.com and GNC will own eight percent of drugstore.com for cash
investments of $7.6 million and $2.4 million, respectively. In exchange,
drugstore.com will receive the cash and other consideration, including
exclusive marketing commitments and other obligations, having an aggregate
value well in excess of the cash consideration.
The companies said the alliance combines the benefits of online pharmacy
with in-store pharmacy and wellness products and services in a partnership
among three separate companies that are each leaders in their categories.
The companies also said the alliance creates the first online pharmacy
offering the ease and manageability of online ordering with the choice of local
in-store pickup or mail delivery of prescription medications. The online
pharmacy will be an enhancement of the current drugstore.com Web site
with Rite Aid and GNC branding added to the Home, Pharmacy and
Wellness pages. The enhanced site is expected to be operating by early fall.
drugstore.com will have the exclusive online rights to sell all GNC brand
products as well as the new Rite Aid/GNC PharmAssure (tm) brand of
Pharmacist recommended vitamins and nutritional supplements, which will
be introduced this fall with a multimillion-dollar marketing campaign.
drugstore.com will create a separate "GNC Live Well" boutique featuring
GNC proprietary products, PharmAssure products and extensive educational
information on health and wellness.
"This alliance joins key players from the online pharmacy space, the retail
drugstore setting and the wellness and nutrition category," said Peter
Neupert, president and chief executive officer of drugstore.com. "We will be
able to offer customers an enhanced shopping experience by combining both
the online and offline worlds for their pharmacy needs, as well as providing
easy access to the products that enhance and promote well being."
Neupert continued: "Rite Aid is well positioned in the industry, because it
has a large retail store base and owns PCS, one of the largest pharmacy
benefits managers. Rite Aid's strategy is to be a leader in the prescription
delivery market, so our partnership is a natural fit in the development of the
online pharmacy channel.
"GNC is the clear market share leader in the wellness category and
understands how the online medium benefits customers who want to learn
more about taking care of their bodies with wellness products.
"Partnering with leaders will help us to deliver an enhanced customer
experience online for health and wellness," Neupert said.
"We believe this will be a win situation for Rite Aid, any way you look at it,"
said Martin Grass, Rite Aid chairman and chief executive officer, who said
his company carefully investigated other online drugstore companies before
choosing to partner with drugstore.com.
"We are partnering with the player we believe will be a leader in this Internet
space because of its well-honed marketing strategy and strong financial
backing," Grass said. "Combining drugstore.com's ease of ordering with the
convenience of same-day pickup at our stores will attract both current and
new Rite Aid customers. Moreover, Rite Aid, through PCS, is particularly well
positioned to strengthen drugstore.com's ability to serve pharmacy
customers.
Grass continued: "It also makes a lot more economic sense to partner with
drugstore.com because it has the expertise, the capabilities and strong
investors, instead of spending the money and the time it would take away
from our core businesses to develop, own and manage our own site. We
believe there will be only a few successful companies in this category, and
drugstore.com is a leader."
William E. Watts, GNC president and chief executive officer, said, "We
welcome this opportunity to partner with one of the most innovative and
successful e-retailers. We believe that this achieves our strategic objective of
creating and maintaining a strong presence in the Internet-based mass
market while, at the same time, providing a major distribution channel for
GNC-branded products and PharmAssure.
"The Internet remains an important vehicle for GNC," Watts added, "because
it meets our criteria for long-term profitability--an information-intensive, high
margin, brand-oriented channel with continuity of usage. This alliance with
drugstore.com reflects our desire to establish a strong Internet presence with
a well-established site. It also frees us to focus on our strengths--the
development of the leading supplements brand in the U.S. and control of the
largest store base in supplements retailing--without incurring the risks, costs
and complexities of managing an aggressive electronic presence."
Terms of the agreement also include: -- Rite Aid will make drugstore.com its
exclusive Internet pharmacy
by adding a link to the Rite Aid Web site, sending customers who
want to place an order directly to drugstore.com. -- GNC will make
drugstore.com its exclusive Internet merchant of
goods by adding a link to the GNC Web site, sending customers who
want to place an order directly to drugstore.com. -- Rite Aid and
drugstore.com will leverage each other's advertising
with Rite Aid co-branding its pharmacy marketing with
drugstore.com and drugstore.com co-branding its pharmacy
marketing with Rite Aid.
Rite Aid is one of the nation's leading drugstore chains with annual revenues
of nearly $13 billion and approximately 3,800 stores in 30 states and the
District of Columbia. Rite Aid also owns PCS Health Systems, Inc., which
provides pharmacy benefit management programs and services that can help
improve patient health and reduce health care costs. General information
about Rite Aid, including corporate background and press releases, can be
found at the company's Web site at www.RITEAID.com.
drugstore.com (www.drugstore.com) offers a comprehensive selection of
brand-name personal healthcare products at competitive prices, a wealth of
decision-making resources, personal services and a licensed pharmacy, all
provided online. Shoppers can review in-depth product information and
interact with customer service representatives by phone or e-mail. Shoppers
also can personalize their shopping experience with personal shopping lists,
e-mail reminders for replenishing regularly used products and private e-mail
access to pharmacists and beauty experts for questions.
General Nutrition Companies, Inc., based in Pittsburgh, PA, is the only
nationwide specialty retailer of vitamin and mineral supplements, sports
nutrition and herbal products and is also a leading provider of personal care,
fitness and other health-related products. The company's products are sold
through a network of 4,091 retail stores operating under the General Nutrition
Centers, Health & Diet Center and GNC Live Well names, of which 2,669 are
company-owned and 1,422 are franchised. The company's stores are located
in all 50 states, Puerto Rico and 25 foreign markets.
This release contains certain "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
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