Drugstore.com, Inc. (Nasdaq:DSCM), a leading online retailer of health, beauty, vision, and pharmacy products that owns and operates the Beauty.com webstore, announced that it has entered into an agreement to acquire Salu, Inc. in a stock and cash transaction. Salu owns and operates the SkinStore.com webstore, a leading online retailer of clinical skin care and beauty products.

The acquisition will create one of the largest online beauty retailers offering consumers a wide-ranging product selection, with mass beauty products on Drugstore.com, prestige beauty brands on Beauty.com and clinical skin care products on SkinStore.com. Together, the companies will have a broader array of products to offer across their online stores and will gain efficiencies in many operational areas. Under the agreement, Salu will continue to focus on its brands and customer experience and will operate in Sacramento, CA.

“Beauty is a cornerstone of our growth strategy, and we are delighted to expand our footprint with the addition of SkinStore.com to our online portfolio,” says Dawn Lepore, CEO and chairman of the board, drugstore.com.”This acquisition will further solidify our position as a first choice for beauty consumers and brings us one step closer toward achieving our goal of becoming the leading online retailer of beauty and spa products.”

Under the terms of the agreement, the transaction is valued at $36 million payable half in cash and half in Drugstore.com common stock, plus an opportunity for senior management of Salu to receive an additional amount based on achievement of certain performance targets and integration milestones.

“This partnership is a tremendous opportunity to leverage each other’s strengths and together become a clear leader in online beauty,” says Jim Steeb, CEO, Salu, Inc. “We will continue to build the SkinStore brand and our partnership with spalook and to serve our customers well. We believe Drugstore.com along with Beauty.com, is the best partner to help us do this over the long term.”