Excite@Home Buys Blue Mountain Arts Web Site for $780 Million

Excite@Home says it hopes to convert its new property's greeting card customers into devoted Internet shoppers.
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Excite@Home

(ATHM) - Get Report

has agreed to buy the

Blue Mountain Arts Publishing's

Web site for $780 million in stock and cash, the companies announced today, in an effort to expand its reach in electronic commerce.

Analysts have identified Blue Mountain, the electronic greeting division of the closely held company, as a possible target for any number of web portals.

Users of

Bluemountain.com

can send email greeting cards purchased on the site. The web site is the 18th most popular in the country, attracting 9.1 million unique visitors in August, according to latest figures available from

Media Metrix

, the New York Internet tracking firm.

Most of the Web sites in front of Bluemountain.com are Excite@Home competitors like

America Online

(AOL)

. Among e-commerce sites, only

Amazon.com

(AMZN) - Get Report

and

eBay

(EBAY) - Get Report

rank ahead.

Excite@Home, which is based in Redwood City, Calif., says it hopes to convert its new property's greeting card customers, who typically go directly to the Blue Mountain site to buy cards, into devoted Internet shoppers, selling them its services, @Home broadband service and other products.

In a statement, the company cited figures from

@Plan

, another Internet tracking firm, showing Bluemountain.com's greeting card purchasers were 55% more likely to shop on line than average Internet users and 70% more likely to purchase goods on line.

According to Media Metrix, more than half the Bluemountain.com visitors in August were older than 35. Almost 70% lived in households with more than three people, and more than half made less than $60,000 a year.

Excite@Home will issue around 11 million shares, valued at $430 million, to purchase Bluemountain.com from Blue Mountain Arts, which is based in Boulder, Colo. The deal also includes $350 million in cash, more than three times the cash and cash equivalents listed in the last cash flow statement the company has made available, dated June 30. The agreement includes performance triggers, based on Bluemountain.com's ability to attract holiday traffic, that could require Excite to pay an additional $270 million in stock.

In response to the deal, Excite@Home's shares jumped 1, to 40, by midday. But they are still trading well below their 52-week high of 99.

"Simply on the strength of the appeal of their content, and without any marketing or distribution relationships, Bluemountain.com has become one of the most popular sites on the Web," said George Bell, Excite@Home president, in a news release. "This acquisition promises to be a significant platform for future growth."

Examples included in a statement from the company included notifying users of the Excite calendar service of their mothers' birthdays and offering them the chance to send greeting cards and flowers.

Hambrecht & Quist

raised its 2000 revenue estimate for Excite@Home by $24 million, to $801 million from $777 million, because of the deal. The firm maintains a buy on the stock.