Fingerhut Takes 19.9 Percent Stake In FreeShop Online

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Catalog giant Fingerhut will announce today that it has agreed to take a 19.9 percent stake in Internet lead-generation firm FreeShop online.


Under terms the agreement, Fingerhut can increase its stake in the Internet firm to 40 percent. The cataloger plans to take FreeShop public sometime in 1999. Financial terms of the agreement were not disclosed.


This investment is the latest in a string of deals since Fingerhut announced in July that it would begin buying pieces of Internet companies, growing them and taking them public.


"We intend to continue to make Internet deals and partner with other companies where there are opportunities to build our presence and become the leading retailer on the Web," said Ted Deikel, chairman and CEO, Fingerhut, Minnetonka, MN.


FreeShop (www.freeshop.com), Seattle, is an online storefront that generates leads - at a fee of from 40 cents up to $60 - through client-sponsored product offers such as free trial subscriptions. Visitors to the site are then invited to opt in to receive offer-laden e-mail newsletters by joining Club FreeShop.


FreeShop claims its site receives more than 750,000 visits a month and has taken more than 3.6 million online orders since it launched in 1994. Club FreeShop claims some 450,000 members.


Earlier this month, Fingerhut announced that it had acquired 19.9 percent interest in The Zone Network, parent company of mountain sports site MountainZone.com. Fingerhut has the right to increase its stake in The Zone Network, Seattle, to a majority interest. Financial terms of the deal were not disclosed.


Fingerhut's aggressive, multi-faceted Internet strategy began when it relaunched its flagship site at www.fingerhut.com in July and announced it had taken a minority stake in Web merchant PC Flowers and Gifts. The cataloger has also been shopping its back-end capabilities - which include order processing, customer service and telemarketing - around to other Internet merchants. Fingerhut claims to have struck back-end fulfillment deals with 10 unnamed merchants so far.

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