American Greetings Corp., which popularized e-mail greeting cards, plans to buy rival Bluemountain.com for $35 million in cash. The purchase comes just two years after Excite@Home Corp. paid $780 million in cash and stock for the e-mail greeting card publisher.
American Greetings will benefit from the deal with an expanded online greeting presence and increased profits and online advertising revenue in 2002. ExciteAtHome, a high-speed Internet access firm can use the cash.
As part of the agreement, ExciteAtHome agreed to buy about $3 million in advertising on the AmericanGreetings.com and BlueMoutain.com Web sites. BlueMountain.com also will continue to be the preferred provider of electronic greetings for the Excite Network for the next three years.
A previous warning issued by Redwood City, California-based ExciteAtHome said that it may not have the funds needed to carry it through the end of the year. The company’s former auditors, expressed concern last month about the company’s ability to stay in business, according to news reports. ExciteAtHome CFO Mark McEachen resigned on Monday.
ExciteAtHome, which has nearly $1 billion in debt, has struggled under the weight of its failing Internet media properties, including the Excite.com portal. It has said it would hire an investment banker to help explore financial options.
American Greetings, which operates the AmericanGreetings.com, Egreetings.com and BeatGreets.com Web sites, said its online unit still expects to reach profitability in the fourth quarter. The acquisition should boost profits in 2002 and beyond because of increased revenues from online advertising and other services, the company said.
More than 50% of the U.S. population and 85% of all Internet users visit a greeting’s site annually, according to research firm Jupiter MediaMetrix. Once the deal closes, AmericanGreetings’ online greetings services will exceed 100 million unique visitors each year, the research firm said.
ExciteAtHome agreed to buy Bluemountain.com in 1999 for about 11 million shares, valued at the time at $430 million, and $350 million in cash. It also agreed to pay up to another $270 million in stock, for a total price of around $1.05 billion, if Bluemountain met certain performance targets.
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