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Petsky Sees M&A Activity Up in First-Half 2004

Direct marketing as well as marketing services and technology companies announced 275 merger and acquisition deals in the first half of 2004 valued at $14.1 billion, investment banking firm Petsky Prunier, New York, said in a report issued yesterday.

Though there were no “mega-deals” valued at more than $1 billion in the first half, the number of transactions increased 10 percent over the first half of 2003, the report said. Merger and acquisition activity in the sector is “as buoyant as we have seen it in years,” Petsky Prunier said in the report.

The report carved the industry into three segments, including:

· Marketing Services, which produced 111 transactions valued at $5.2 billion in the first half. The segment's largest deal in the second quarter was AOL's purchase of Advertising.com for $553 million. An abundance of marginally profitable firms selling undifferentiated services in this sector continues to fuel consolidation, the report said.

· Marketing Technology, which produced 105 transactions valued at $2.7 billion. The largest deal in the second quarter was Symantec's purchase of marketing software provider Brightmail for $370 million. The trend of consolidations in this highly fragmented segment continues, the report said.

· Direct Marketers, which produced 59 transactions valued at $6.2 billion in the first half. The biggest deal in the second quarter was Deluxe's purchase of cataloger New England Business Service for $747 million. Established-brand direct marketers are proving attractive for private equity buyout groups, which are aggressively seeking multichannel DMers to buy, the report said.

Four direct marketers — cataloger Cabela's, interactive marketer Blue Nile, affinity marketer Intersections and retailer Design Within Reach — went public in the first half of 2004.

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