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Liberty Digital Invests in Alloy Online

Generation Y destination and e-commerce site operation Alloy Online Inc. (ALOY) entered into a financial and strategic partnership with Liberty Digital Inc. in a deal valued at about $54 million.

Liberty is an interactive television company with investments in related companies, as well as its own Internet content and infrastructure.

Liberty Digital will receive approximately 2.9 million shares of newly issued Alloy Online common stock for $19 per share. In exchange, Alloy will receive $10 million in cash and 837,740 shares of Liberty Digital common stock, which shares have been valued based on their average closing price over the prior 30 trading days.

Liberty Digital will then own 16.6 percent of the outstanding shares of Alloy.

In addition to the investment, Liberty Digital and Alloy will work together to target Alloy's teen demographic through Liberty Digital's interactive TV-based commerce initiative. Lee Masters, president and chief executive officer of Liberty Digital, will join Alloy's board of directors.

"We are excited that Liberty Digital has selected Alloy as its anchor in the teen space, particularly as we prepare for the future convergence of broadband and television," said Matt Diamond, Alloy Online chairman and CEO.

"Gen Y, which thrives on interactivity and readily adopts new technologies, will be a core demographic for our interactive TV offerings," said Masters.