Cross Media Marketing Corp., which markets magazine subscriptions and memberships by phone and online, will acquire LifeMinders, Inc., a provider of customized online content, for $68.1 million in cash and stock, the firms announced today.
If approved by the stockholders of both firms, the merger will give Cross Media access to LifeMinders’ 20 million-name database, and to its technology. This, in turn, will help New-York-based Cross Media become “a multi-product, multi-channel company,” CEO Ronald Altbach said during a telephone conference.
Cross Media expects that the merger will lead to an immediate revenue jump when it closes in the fourth quarter. Both firms are publicly traded.
Founded in January 2000 as Symposium Corp., Cross Media has projected revenue of $100 million for this fiscal year, and hopes to eventually grow to $400 million to $500 million, half by organic growth. The firm reported revenue of $62 million for the last 11 months of 2000, and EBITDA of $4 million after non-recurring charges.
The LifeMinders merger will give it the financial strength to complete “complementary acquisitions,” executives noted. However, the cash payout for the purchase will be reduced by up to $1.7 million if LifeMinders’ net cash is less than $50 million on Aug. 31.
Cross Media executives said they did not expect any cost cutting at LifeMinders, which is “already down to a skeleton crew right now.”
Altbach will continue in his present roles. Jonathan Bulkeley, CEO of LifeMinders, will join Cross Media’s executive committee, and he and one other LifeMinders executive will sit on the board.
In an interview late last year, Bulkeley described LifeMinders as a permission-based deliverer of custom content.
“You give them your e-mail address and tell them your interests, and they send you e-mails with customized advertising–just for you,” he said. “It’s gifts, it’s stuff about young children, it’s astrology, it’s weather. It’s like customizing a newspaper or Yahoo, but instead of having to go there, it gets pushed to you.”
Richard Kaufman, president of Cross Media, said the firm will eventually “use LifeMinder’s ability to analyze not only online, but offline.”
The company also hopes that the merger will help it reduce media-buying and customer-acquisition costs for both units, making LifeMinders “a positive cash-flow business.”
A strategic partnership with Traffix led to the sending of 50 million e-mails for Cross Media in the first six months of this year. Respondents were directed to a toll-free telephone number. Cross Media has also formed relationships with Cendant Corp. and other firms.
Robertson Stephens, Inc. handled the transaction for Cross Media. LifeMinders was advised by Legg Mason Wood Walker Inc.
LifeMinders’ stockholders will have a choice of receiving all cash, all stock or a mix of 18% cash and 82% stock. However, these cash payments will be reduced if the total goes over $12.1 million.
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