Stock Watch: Petstore Deal Sends Lower (Nasdaq: IPET) fell 1/16 to 2 1/16 Tuesday after announcing an agreement to acquire rival pet supply e-tailer for 5.8 million common shares and 850,000 convertible preferred shares.

The agreement includes a partnership with Petstore backer Discovery Communications, which will promote on its TV networks and give the company an e-commerce position with links on its Web site. also said it will form a two-year cross-promotional agreement with food retailer Safeway, Inc. The grocery chain will promote in its stores and ads, and will carry Safeway Select brand pet foods on its site. said it will acquire Petstore’s database of customers and newsletter subscribers, as well as its trademark, trade name, domain name and its live-fish business, Flying Fish Express. will also get a $3 million equity investment.

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