Walgreens will acquire drugstore.com for about $409 million in cash to significantly accelerate its online strategy.

Under the terms of the agreement, drugstore.com will receive $3.80 in cash for each share, which is roughly 102 percent over drugstore.com’s 30-day average closing stock price.

This is no big exit for the Bellevue, WA-based company, which was founded 13 years ago in the dotcom heyday. The purchase price also falls below the company’s 2010 revenues.

In other words, not the Web 1.0 exit expected way back when.

Walgreens President and CEO Greg Wasson: “This acquisition offers a unique opportunity that will provide us immediate access to more than 3 million savvy, online loyal customers, and will allow us to move even closer to our existing customers through relationships with new vendors and partners, adding approximately 60,000 products to our already strong online offering.”

Walgreens will fund the acquisition with cash and anticipates the merger to close by the end of June. The merger is subject to customary conditions, including approval by drugstore.com’s stockholders. The agreement was unanimously approved by drugstore.com’s board.

In a statement, drugstore.com’s CEO Dawn Lepore, said the company will benefit from this transaction by joining the largest chain in the U.S. “We believe we have made significant progress over the last six years and built an organization with a broad and deep bench of Internet experience. The opportunity to become a part of Walgreens is the right next step in this journey.”

Walgreens said it will maintain drugstore.com’s Bellevue headquarters. In all, the company employs about 1,000 people at its offices, call center and distribution centers. Walgreens will also maintain the brands separately, including Beauty.com, SkinStore.com and VisionDirect.com, after the transaction closes.

In 2010, drugstore.com’s revenues totaled $456 million, which are relatively small compared to Walgreens’ revenues of $67 billion.

It’s not yet 100 percent clear if this breach is connected to the recent breach of the email marketing firm Silverpop Systems, but it sure looks that way. Honda was an enthusiastic Silverpop customer as recently as 2009, according to this press release. It’s the same company whose data was breached in thefts of customer data from McDonald’s and deviantArt. A similar incident was reported concerning the drugstore chain Walgreen’s, but it hasn’t been tied specifically to Silverpop.

The list contained the names, login names, email addresses and–get this–vehicle identification numbers of more than two million Honda owners. Another list, this one containing only the email addresses of nearly three million Acura owners, was also taken.

Honda has contacted all the customers via email. The worry is that affected owners, especially those on the list with the VINs, may be targeted for some kind of phishing attack. Imagine getting an email from someone pretending to be your local Honda dealer who correctly identifies the car you just bought and asks you to give up more personal information so that you can get “special offers.”

However, we’re starting to get more information about how the McDonald’s incident appears connected to hacking incidents at other sites. Chicago Business is reporting that the company responsible for McDonald’s email marketing is Silverpop Systems, and that it had been operating under a subcontract from Chicago-based Arc Worldwide.

So who else is a customer of Silverpop? Yesterday I received an email from someone who’s a customer of deviantArt, a social network where artists share their creations. DeviantArt has a base of 13 million users. Got an account there? You’d better change any passwords that overlap with other sites. The site advised customers that their accounts were compromised, and blamed Silverpop.

It could extend much further yet. Silverpop has more than 100 clients, and not all of them are publicly disclosed, though here are a few, found on its client quotes page and its case studies page: Stamps.com, Pitney Bowes/Mapinfo, Encyclopedia Britannica, Santander Consumer Finance and watchmaker Fossil. There’s no word how any of those other companies are affected, if at all.

Silverpop CEO Bill Nussey said in a blog message to customers that the FBI is investigating the incident, and that only a small percentage of Silverpop customers have been affected. He also said that Silverpop was “among several technology providers targeted as part of a broader cyber attack.” Stacy Kirk, a Silverpop spokeswoman, wouldn’t say anything beyond what’s in Nussey’s message.

I’m beginning to wonder if there’s some indirect connection between what happened to Silverpop and what happened to Gawker. I’m speculating here, but it’s no stretch of the imagination that numbering among deviantArt’s 13 million users are some of the 1.5 million people whose accounts were compromised in the Gawkergate affair. And the FBI is investigating both. Thomas Plunkett, Gawker’s technology chief, told me by email that there’s no evidence of a connection. Then again, as Business Insider tells it, he hasn’t yet had his meeting with the FBI.

Maybe I’m looking for connections that aren’t really there, but it’s really not hard to see how the breach at Gawker could turn out be the start of a domino effect that’s much larger than anyone has yet realized. There certainly is a lot of grumbling about changing passwords today.

If you know more more about any of this, get in touch!

Below is the email to deviantArt users.

From: deviantART.com (address deleted)
Date: Mon, Dec 13, 2010 at 5:54 AM
Subject: RE: Email Notice

Silverpop Systems, Inc., a leading marketing company that sends email messages for its clients, told us that information was taken from its servers. This was probably part of a sweep by spammers. As a result, email addresses belonging to deviantART members were copied. Corresponding usernames and birth date may also have been removed.

We can assure you that nothing occurred on our systems with respect to this incident and no access was gained to private information on deviantART’s servers.

As a member of deviantART, you certainly have a right to know when an incident of this kind occurs. Unfortunately spammers are an unavoidable part of living on the Web.

The likely result of this event might be an increase in spam to your email. Experts have told us that there is an increase in email scams out there on the Internet and you should be cautious. Only click links or download attachments from people you know, particularly if they ask for personal information, and be sure that your email service provider has adequate spam filters.

Because we value the information that members give us, we have decided not to rely on the services of Silverpop in the future and their servers will no longer hold any data from us.

Yahoo spokeswoman Dana Lengkeek just emailed a statement saying that some Yahoo users were required to reset their passwords. “As part of our ongoing security measures we issued a password reset to some users. Yahoo! does this periodically to ensure the security of users.” She didn’t specify whether or not this was in direct response to the Gawker incident, but it’s not hard to conclude that it was, given the timing. I’ll update if Yahoo says anything further.

I have a Yahoo account and was required to change my password today, and yes, I also had a Gawker commenting account, so at this point it’s safe to say they certainly seem connected.

Meanwhile, Blizzard Entertainment (developer of World of Warcraft and provider of the Battle.net gaming service) was abundantly clear about the connection in an email to its customers. “We’ve recently been informed that several Gawker Media websites have been compromised…To help minimize the effects of this compromise and help keep your Battle.net account safe and secure, we’ve reset your account password,” it said.

Other Web incidents–perhaps connected to Gawkergate, perhaps not–have occurred during the past few days as well. For instance, McDonald’s disclosed that a database containing email address and birthdates of people who had signed up to receive promotions was compromised. It notified those customers on Monday. Again, it’s not clear what connection, if any, there may be to the Gawker incident, but the timing certainly makes it seem possible. I’ve asked McDonald’s for a comment and will update if I get one.

In another incident, drugstore chain Walgreens disclosed on Friday that a database of email address belonging to its customers had been breached. Given the timing–the Gawker incident happened over the weekend–it’s probably not connected, though it’s hard to be sure, as the folks at Anonymous Gnosis, the group that attacked the Gawker sites, say they’ve had access to the database for about a month. I’ve asked a Walgreens spokesman for a comment, and as with all the other cases above will update if I hear back.

This comes on top of other related forced password changes at Twitter and LinkedIn, as my colleague Peter Kafka reported earlier today.

Meanwhile, our friends at Digits have a fascinating graphic on the Top 50 passwords used on Gawker. Topping the list: “123456,” “password” and “12345678.” The two lessons in all this? Make your passwords complex, and don’t use the same password for multiple sites.

The product, called the Contour USB, is an interesting new computer-savvy blood-glucose test meter for diabetics, made by the big pharmaceutical company, Bayer. As a diabetic myself, I’ve been using a more traditional version of such a meter to test my blood several times daily for years. So do millions of others.

What makes the $75 Bayer Contour USB different from typical meters is that it looks and works like a common USB thumb drive, so it was born to integrate with personal computers. It plugs right into a PC or Mac without the need for any cables, and contains—built right in—software you can run on your computer for analyzing your test results. That’s helpful for both diabetics and their doctors, who need to understand the trends in the amount of glucose in the blood to make decisions on medication, diet and exercise.

After testing the Contour USB for five days, I found it worked pretty well and consider it a promising step in diabetes care. More information is at bayercontourusb.com, and the meter can be purchased at the Web site of the drug chain Walgreens and at drugstore.com.

But I am neither a doctor nor a diabetes expert, and I am not advising anyone to switch his or her meter without first consulting a medical professional.

The Contour USB is a compact, rectangular device with a USB connector on one end and a slot for glucose test strips, which collect the blood from the droplet, on the other. The face of the device has a color screen and three buttons that allow you to navigate simple menus.

Bayer’s new Contour USB blood-glucose meter

Loaded inside is a software program called Glucofacts Deluxe that runs on either a Windows PC or Macintosh once you pop the meter into a USB port. It launches directly from the meter’s internal memory, which also contains your test results plus free space for anything else you wish to store on it.

The software reads the glucose results from the meter, and displays them in various logs, charts and graphs, which can be printed out or saved as a file on the computer. The user can provide the printouts to the doctor or email the files containing the data.

This mating of a glucose meter and a computer isn’t a new idea. Many brands of meters can be used with computer programs via extra-cost cables. But because the Bayer device builds in both the USB connector and the software, it makes this process easier than it has typically been. (Another new meter, called Myglucometer, is on the same path. It uses Bluetooth wireless technology to beam results to a PC.)

In my tests, the Contour USB proved quick and easy to use. When you’re actually doing the blood testing, it works pretty much like any other meter, and a computer isn’t involved. The meter’s color screen does, by default, ask you to designate whether the reading was taken before or after a meal, an extra step that can make the results more meaningful. But this feature can be turned off. And there’s an option that allows you to add a canned note, like “Sick,” or “Stress,” to any reading.

The real payoff comes when you plug the meter into a computer and launch the software, which helps you see the trends in your glucose levels over time. For instance, it can plot in various ways how often you stayed in a target zone and when you deviated. I tested this on Windows and Macintosh computers, and it worked. But there were some downsides.

For one thing, to launch the Glucofacts Deluxe software on your computer, you have to click on an obscure-sounding file name. It’s supposed to run automatically in Windows, but I never could get it to do that.

Also, on Windows, the software required me twice to install a new component. And the program is incompatible with Apple’s latest operating system, Snow Leopard. Bayer says it is working on solving the problem.

Another feature some may see as a downside is that the meter’s sealed battery can’t be replaced. But the company sees the freedom from buying batteries as an advantage for heavy users, and claims that even a one-minute recharge session will allow for several tests.

My biggest disappointment with the Contour USB was that it doesn’t provide any way to upload your results to an online repository, where you and your doctor might view them. And the new meter doesn’t tie in with online medical portals from companies such as Google (GOOG) and Microsoft (MSFT). Bayer says it plans an online component for the Contour USB.

Despite these flaws, I consider the Bayer Contour USB to be a welcome move toward integrating home testing with the digital world.

Find all of Walt Mossberg’s columns and videos online, free, at the All Things Digital Web site, walt.allthingsd.com. Email him at mossberg@wsj.com.

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In the ongoing fight between Redbox–which rents DVDs from kiosks for $1–and major Hollywood studios, 20th Century Fox Home Entertainment just filed a brief to dismiss Redbox’s lawsuit against it.

Said Fox in a statement:

“Redbox’s legal claims are fatally flawed. Fox’s filing today makes clear that, in the end, the case is all about Redbox’s refusal to make a business deal on general terms similar to those paid by others in this industry. Instead, Redbox has insisted that Fox sell DVDs to them through distributors, on the date they demand, at the price they want to pay. Unable to get the terms it wanted at the bargaining table, Redbox instead decided to file this meritless lawsuit.”

In a statement, Redbox president Mitch Lowe responded to the filing by stating that Fox was anti-consumer.

“Twentieth Century Fox continues its pursuit to prohibit consumer access to new release DVDs at affordable prices…Redbox remains steadfast in our commitment to protecting consumers’ rights and to providing our customers the DVDs they want, where they want and at the low price they want.”

In two briefs filed this afternoon, refuting Redbox’s allegations, Fox is asserting that it has not refused to provide DVDs to the outfit and has tried to negotiate a deal.

Under contention between the two are the price and terms of when DVDs of hit movies can be released to Redbox.

Redbox has asserted that Fox is violating antitrust laws and copyright misuse in not selling DVDs to the company.

Fox denied that claim in the brief, noting that Redbox simply did not want to pay up in order to get certain DVDs on the “street date,” as do other retailers.

Fox is one of three studios that have become embroiled in lawsuits with Redbox.

Located in Oakbrook Terrace, Ill., and is wholly owned by Bellevue, Wash.-based Coinstar (CSTR), Redbox is seeing strong rental growth due to its $1-a-night price for first-run movies, which the company distributes via its 15,000 freestanding machines in supermarkets and convenience stores, as well as in big chains like McDonald’s (MCD), Wal-Mart (WMT) and Walgreens (WAG).

Its fascinating legal battle with the studios centers around the issues of steep discounting, release windowing and the price for premium content.

Redbox recently sued Warner Home Video, owned by Time Warner (TWX), for denying it the opportunity to buy DVDs without being required to wait a month or more to rent them out.

It has previously gone after NBC Universal’s Universal Studios Home Entertainment, owned by GE (GE) and Fox, a unit of News Corp. (NWS), for similar release restrictions.

The trio’s movies make up 40 percent of the DVD rental market.

In its brief today, Fox noted that it was willing to sell to Redbox directly, rather than via wholesalers, but that talks collapsed over pricing issues.

And while some studios are holding fast to fighting price declines represented by consumer-friendly, idiot-proof tech solutions like Redbox, others are not.

Redbox has inked deals with Sony (SNE); Lions Gate (LGF); Paramount, a unit of Viacom (VIA); and also gets movies from Walt Disney (DIS).

Here are two briefs filed by Fox in U.S. District Court in Delaware, the first, a motion to dismiss the lawsuit by Redbox, and the second to transfer venue to California:

FINAL Opening Brief in Support of Fox’s Motion to Dismiss

Redacted Transfer Venue Brief

(Full disclosure: Fox is owned by News Corp., which also owns Dow Jones, owner of this site.)

]]> http://allthingsd.com/20091001/fox-slaps-back-legally-at-redbox/feed/ 1 http://allthingsd.com/20090831/louie-swisher-hearts-redbox-but-hollywood-not-so-much/ http://allthingsd.com/20090831/louie-swisher-hearts-redbox-but-hollywood-not-so-much/#comments Mon, 31 Aug 2009 22:10:02 +0000 Kara Swisher http://kara.allthingsd.com/?p=17783

If you want to get Hollywood movie studio types irked, mention Google (GOOG). And if you want them steamed, bringing up Netflix (NFLX) will usually work.

But if you want to see the tops of their heads blow off, Redbox is just the ticket.

Except not to their movies, it seems, if the major movie studio execs have their way in an ever-growing legal battle with the DVD-rental kiosk company.

Three of them have become embroiled in lawsuits with Redbox, even as the DVD market contracts.

Well, not for Redbox–which is located in Oakbrook Terrace, Ill., and is wholly owned by Bellevue, Wash.-based Coinstar (CSTR).

It is seeing strong rental growth due to its $1-a-night price for first-run movies, which the company distributes via its 15,000 freestanding machines in supermarkets and convenience stores, as well as in big chains like McDonald’s (MCD), Wal-Mart (WMT) and Walgreens (WAG).

Redbox is arguing that once it buys DVDs from the studios through wholesalers, it can charge any price it wants.

Studios beg to differ, claiming that bargain-basement pricing is hurting the market and that Redbox should not get the goods until after the first month of release of movies into the DVD market.

“These guys are simply grossly undervaluing our content,” said one studio source, in what is a typical sentiment. “We get the windowing model is changing, but we can’t just give these guys our stuff at a low, low price to essentially enable them to give it away…and that’s exactly what they wanted us to do.”

Thus, it’s a perfect set-up for legal high jinks about the issues of steep discounting, windowing and the price for premium content.

Redbox recently sued Warner Home Video, owned by Time Warner (TWX), for denying it the opportunity to buy DVDs without being required to wait a month or more to rent them out.

It has previously gone after NBC Universal’s Universal Studios Home Entertainment, owned by GE (GE) and 20th Century Fox, a unit of News Corp. (NWS), for similar release restrictions.

And while some studios are holding fast to fighting price declines represented by consumer-friendly, idiot-proof tech solutions like Redbox, others are not.

Redbox has inked deals with Sony (SNE), Lions Gate (LGF), Paramount, a unit of Viacom (VIA), and also gets movies from Disney (DIS).

It’s a fascinating case to watch–yet another wrinkle in the what-is-content-really-worth question that has been plaguing all traditional media.

Unfortunately for those companies, the kids seem to love it, as you will see from this video I did while renting movies at our local Safeway (SWY) with my seven-year-old son, Louie, at a small competitor to Redbox with about 1,400 outlets called DVDPlay.

We use both, but Louie–like a lot of consumers–is most definitely a fan of the Redbox method.

Here’s the video:

[Full disclosure: News Corp. owns Dow Jones, which owns this site.]

]]> http://allthingsd.com/20090831/louie-swisher-hearts-redbox-but-hollywood-not-so-much/feed/ 4 http://allthingsd.com/20090213/happy-valentines-day-a-geek-love-poem/ http://allthingsd.com/20090213/happy-valentines-day-a-geek-love-poem/#comments Fri, 13 Feb 2009 17:00:15 +0000 Kara Swisher http://kara.allthingsd.com/?p=9713 Tomorrow is Valentine’s Day, of course, so here’s a lovely sentiment on a T-shirt from the fine folks at ThinkGeek.

(BoomTown is still in an Elmer’s glue coma from making 252 handmade cards with 33 pounds of glitter, which my sons’ school insists on instead of the store-bought kind from Walgreens that I prefer.)

In any case, big, sloppy hugs all around to the readers of All Things Digital–except for those who know just who they are.

But to make up, please don’t think sending a romantic Twitter to us or one of those dumb digital virtual gifts of silly-looking little animals and baked goods on Facebook is going to cut it.

That’s right, you need to send a whole email to show that you really care! And maybe an iTunes gift certificate for Jill Sobule’s fabulous new “California Years” record too (I am wearing out my advanced copy, but it is officially out in April, including the apt song, “Bloody Valentine”).

Also a Tesla.

After all, love is bling.

]]> http://allthingsd.com/20090213/happy-valentines-day-a-geek-love-poem/feed/ 2 http://allthingsd.com/20080806/accessing-email-without-web-access/ http://allthingsd.com/20080806/accessing-email-without-web-access/#comments Thu, 07 Aug 2008 01:18:44 +0000 Walter S. Mossberg http://mailbox.allthingsd.com/20080806/accessing-email-without-web-access/ Here are a few questions I’ve received recently from people like you, and my answers. I have edited and restated the questions a bit, for readability.

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My mother is 80 years old and would like to purchase a device whereby she can send and receive emails only. She does not surf the Internet. Do you have any suggestions?

Unfortunately, I don’t know of a simple gadget, like the now-discontinued MailStation, that just sends and receives emails. However, there is a service and device, aimed mainly at those seniors who aren’t comfortable with computers or smart phones, that allows the receipt of email, and even photo attachments. The drawback is that this system is one-way — users can receive email and pictures but can’t send emails.

The service is called Presto, and it uses a special Hewlett-Packard printer that connects to a phone line. Your mother would receive a Presto email address, and any emails and photos sent to her would materialize as printouts. A broadband connection is neither required, nor compatible. The device costs $100, and the service costs $100 a year, if paid on an annual basis, or $10 a month, if paid monthly. Information is at presto.com.

I have boxes and boxes of old photos, and about 20 home videotapes and old movies. Some of the photos are fading and showing wear, so I would like to find a company that can convert them to a DVD. Doing it at home would take too long. Have you reviewed such a company?

. Some years back, I reviewed and recommended a service called YesDVD, from a company called YesVideo, that converts videotapes, movie film and photos to DVD. It worked well in my tests. The service operates through retailers, such as Walgreens, CVS, Best Buy and Costco, where you drop off your materials and then later receive the DVD, plus your original stuff. More information is at yesvideo.com.

I enjoyed your review of Xobni. Will it work on Outlook Express or Entourage?

No. Xobni, which creates personal profiles and social networks from your stored email, doesn’t work with Microsoft Outlook Express for Windows or Microsoft Entourage for the Mac, or for any email program other than Microsoft Outlook 2003 or 2007, on computers running Windows XP or Windows Vista. The company is working on a version for Yahoo Mail.

You can find Mossberg’s Mailbox, and my other columns, online, free, at the new All Things Digital Web site, http://walt.allthingsd.com.

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