GSI buys e-mail marketer for $157M

Web retailer GSI Commerce Inc. today said it acquired a Massachusetts firm in a $157-million deal that gives the King of Prussia company a foothold in e-mail-based marketing.

The acquired company, privately held e-Dialog Inc., of Lexington, Mass., had revenue of about $34 million for the 12 months ended Sept. 30. GSI said today that it expects its own 2007 revenue will be in the range of $748 million to $750 million.

"The acquisition will significantly expand the breadth and depth of GSI's interactive marketing services capabilities," GSI said in a statement.

Ten-year-old e-Dialog operates permission-based e-mail marketing campaigns for customers that have included American Eagle Outfitters Inc., Avis Budget Group Inc., BMG Music Service, British Airways, CBS Corp., and Dell Inc.

The two companies said e-Dialog will be an independent operating unit of GSI.

The deal includes a cash payment of $147.8 million and restricted shares of GSI Commerce, valued at $9.2 million.

GSI will be obligated to make an additional payment of $750,000 in fiscal 2009 if certain net revenue targets are achieved in fiscal 2008, the company said.

The restricted shares will go to e-Dialog employees, including its senior management. The acquisition is expected to close within 30 days.

GSI operates e-commerce sites for 85 clients, including retailers and sports teams. It said today it expects 2008 revenue to reach $1 billion, up 33 percent from 2007.

GSI will report full 2007 earnings on Feb. 13. Its shares were down 33 cents, or 2 percent, to $15.91 in morning trading.