Excite@Home Buys Blue Mountain Arts for $780 Million

With visions of holiday marketing and broadband promotion, Excite@Home Monday inked a deal to buy e-greeting card maker Blue Mountain Arts for $780 million in cash and stock.

Excite@Home will issue approximately 11 million shares worth $430 million and pay the remaining $350 million in cash. The deal is expected to close by year's end.

The company expects the purchase to extend its audience reach by about 34 percent and will use the opportunity to inject new e-commerce service and promotions with each card sent. Excite@Home is also developing a means of marketing its broadband service through the Bluemountain.com acquisition.

If Bluemountain.com meets certain traffic and performance targets over the holidays, the company could see another $270 million from Excite@Home (ATHM).

"Perhaps more than any other site on the Web, Bluemountain.com has done an incredible job of creating viral growth around occasion-driven commerce," said George Bell, Excite@Home's president. "For Excite@Home, this acquisition promises to be a significant platform for future growth in both narrow and broadband content to generate increases in registered users, @Home broadband subscribers and revenue."

Bell also said that the site's user loyalty and wide range of services appealed to the broadband leader. Bluemountain.com's offerings will also be incorporated into several sections of the Excite portal.

The card site currently boasts 9 million unique users every month.

Excite@Home said the deal gives it an opportunity to increase cross-promotion and sales of Excite products as well as @Home's cable modem service.

Excite@Home Monday also announced separate marketing and distribution deals with Proflowers.com, Dan's Chocolates and Lucidity Inc., in which the companies will pay a combined $34 million over three years. The goal of the alliances is to get customers to also purchase goods when they send e-greeting cards.