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DoubleClick to Acquire FloNetwork in a Bid to Shore Up Its E-Mail Business

DoubleClick Inc., New York, an ad-serving network, said today that it will acquire Toronto-based e-mail marketing services provider FloNetwork Inc. in a cash and stock deal.

Financial terms of the deal were not disclosed. It is expected to close in the second quarter.

FloNetwork, which is privately held, provides e-mail messaging services and software. The company delivered more than 540 million e-mails for more than 125 clients in fourth quarter 2000.

FloNetwork will be merged into DoubleClick's Canadian e-mail operations, according to Court Cunningham, DoubleClick's vice president and general manager of DARTmail technology.

“We are going from two medium-sized players in e-mail to becoming the No. 1 player in volume delivered and the No. 2 in revenue,” Cunningham said.

He noted that DoubleClick, through its DARTmail e-mail marketing technology, delivers about 150 million e-mails a month for 70 clients.

Dana Serman, an analyst at Lazard Freres LLC, characterized the FloNetwork deal as a “modest acquisition” for DoubleClick. However, he said, it will help the company become more competitive in e-mail marketing, particularly against its main competitors.

“While it's not a done deal that they will take market share away from ClickAction, it's a modest positive for the company,” he said. “It will make things a little more competitive in the industry.”

Serman said DoubleClick's ability to offer services other than just e-mail, such as ad targeting and tracking, bodes well for the company.

One thing this acquisition does not give DoubleClick is a huge database of e-mail lists, something its competitors have. But Serman said this should not be a problem for the company.

“They can afford to buy anyone, and everyone is a seller,” he said. “The very fact that they're not buying NetCreations or 24/7 tells me they have a lot of confidence in their abilities.”

DoubleClick's Cunningham said he does not consider NetCreations Inc. or 24/7 Media Inc. direct competition anyway.

“We think of e-mail as two businesses,” he said. “There's the technology business and there's the media business. NetCreations is a list broker. Our competition will be Digital Impact, MessageMedia and ClickAction.”

This is not DoubleClick's first attempt at going head-to-head with its e-mail competition.

In October, the company said it would purchase NetCreations in an all-stock transaction then valued at $191 million. However, shortly after, NetCreations said it accepted a third-party merger bid from SEAT Pagine Gialle, Turin, Italy, for $111 million in cash.

As part of its deal with DoubleClick, NetCreations paid the company an $8.6 million termination fee.

Separately, DoubleClick said Feb. 22 that less than a year after setting up shop in Brazil, it was closing its media sales operations there because of disappointing growth in online advertising. The company shut its Sao Paulo office, which employed 10 people. It now plans to serve its 50 Brazilian clients through a telemarketing team at its New York headquarters.

But the company is not abandoning the country entirely and said it would maintain a presence by keeping a Sao Paulo-based team to serve clients' technology needs.

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