GSI Commerce Inc. acquired e-Dialog Inc. in a $157 million deal that gives the King of Prussia company a foothold in e-mail-based marketing.
Privately held e-Dialog Inc., of Lexington, Mass., had revenue of about $34 million for the 12 months ended Sept. 30. 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 P.L.C., CBS Corp., and Dell Inc.
The two companies said e-Dialog would 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.
“e-Dialog is a high-performing company with a promising growth trajectory and is a perfect strategic, geographic and financial fit for GSI. We see the market demanding more sophisticated marketing services every day and have made it an imperative at GSI to provide our partners with robust and advanced services like e-Dialogs,” said Michael G. Rubin, chairman and CEO of GSI Commerce®. “We are really excited to expand GSI capabilities in this area. We believe e-mail marketing has highly attractive fundamentals, which is evidenced by the strength and impressive projected growth of the industry. According to the Direct Marketing Association, e-mail offers online marketers the highest rates of ROI compared to any other marketing channel, and with a 25 percent increase in spending expected in 2008 it is set to drive nearly $27 billion in sales. This makes it an integral component of a balanced marketing program one we believe is less influenced by downturns in the economy.
“After a broad evaluation of the industry we found e-Dialog to have the strongest services capabilities and most sophisticated technology,” continued Rubin. “And like GSI, they demonstrate a true passion for adding strategic value to their clients marketing programs – beyond technology solutions alone. We have complete confidence that integrating e-Dialogs solutions with our e-commerce technology platform will help our partners bring their e-marketing efforts to the next level and drive increased growth and partner satisfaction.”
