From Net access to flowers: United Media buys FTD

In what appears to be an odd pairing, United Media, which owns dial-up Internet provider NetZero, is buying florist FTD for $456 million.

What does an Internet service provider have in common with a florist?

Seemingly not much. But United Online, which owns dial-up Internet service provider NetZero, said Wednesday that it's spending $456 million to buy FTD Group, the floral and specialty gift provider.

I don't think I'm alone in thinking this seems like an odd pairing. FTD is one of the largest floral companies in the world, providing products to consumers as well as retail florists throughout the U.S., Canada, U.K., and Ireland. But United Online, which owns Internet properties such as Classmates.com, Juno, NetZero, and MyPoints, said the FTD acquisition will provide it with additional revenue and help it expand into the growing floral Internet business.

"This transaction will meaningfully diversify our revenue base within a large global market experiencing significant migration to the Internet," the company's CEO Mark R. Goldston told The Wall Street Journal.

But as anyone familiar with M&As can tell you, most mergers, even the ones that seem to make sense, don't end up working out. Just look at Time Warner and AOL, which by most accounts is considered a huge failure. Or even eBay's $2.6 billion acquisition of Skype. The deal hasn't been a total bust, but last year eBay took a $900 million so-called impairment write-down against the value of Skype. In these examples, companies spent loads of money to "diversify" their businesses, but in the end the deals didn't work out as planned.

While I'm sure that United Media's execs believe there is a very good, strategic reason to get into the flower business, time will tell if the strategy delivers on its promise.

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About the author

Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.

 

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