Excite@Home Adds Blue Mountain To Its Arsenal

Excite@Home (Nasdaq: ATHM) announced today that it has agreed to purchase online greeting card company Blue Mountain Arts Publishing for approximately $780 million (US$) in cash and stock, with the possibility of a bonus stock issue that would push the deal above $1 billion.

According to Media Metrix, an online Internet and Digital Media measurement company, Blue Mountain Arts is the 14th most-trafficked Web property.

The same report also stated that Blue Mountain Arts now reaches more than nine million unique users each month, making it the leader in online greeting cards with more than 65 percent of the market and a larger reach than all of its competitors combined. Excite@Home plans to tap into this audience by offering Excite products and the @Home broadband service to Blue Mountain Arts' users

This deal comes only a week after rumors swirled around Bluemountain.com that the company would be sold for as much as $1.5 billion to eToys, CMGI, Inc. or Excite@Home.

A Win-Win Opportunity For All

Bluemountain.com views the deal as a win for its customers. "Excite@Home can provide our loyal community with more services to enhance the culture we've created," said Mark Rinella, Vice President and General Manager of Bluemountain.com. "Bluemountain.com poetry and whimsical greetings help people of all ages and cultures to communicate their feelings with family and friends. It has always been our mission to bring people closer together through the Internet."

Bonus Shares Based On Good Holiday Season

Meanwhile, as part of the deal, Bluemountain.com could earn an additional payment of up to $270 million in shares of Excite@Home, provided that it meets certain undisclosed holiday sales goals set by the company.

The odds of this scenario happening are strong, as the holiday season has typically been a busy time for Bluemountain.com and has historically provided them with their largest surge in traffic.

Even More Attractive For AOL?

Some industry observers believe that by purchasing Bluemountain.com, Excite@Home will become an even more attractive acquisition target for America Online, Inc.

Earlier this month, AOL CEO Steve Case said that the company was holding a continuing dialogue with Excite@Home. He added then that even though the two companies hadn't agreed on what the deal should be, AOL would remain patient.

At the time, Excite@Home's management issued a terse statement saying that the company "continued to explore many alternatives for maximizing shareholder value."

Other Deals For Excite@Home

Excite@Home also announced distribution deals today with online florist Proflowers.com, former Blue Mountain Arts subsidiary Dan's Chocolates and online gift certificates company Lucidity. With these deals, Excite@Home will receive a combined minimum of $34 million in advertising fee over a period of three years.