to buy assets of rival

In a deal valued at $10.6 million, the online pet retailer will buy its competitor's customer database and original content and will receive a $3 million cash investment. is now the big dog of online pet stores, announcing today that it is buying the assets of rival

Under the terms of the deal, will acquire several of Petstore's assets, including its customer database, domain name, trademarks and original content, as well as its live fish business and several strategic supplier agreements. will take over a partnership with, owned by Discovery Communications, that includes an e-commerce deal and cross-promotions through television, print and on the Web. will also receive a $3 million cash investment from previous Petstore investors to cover any incremental costs associated with the transaction. will issue about 5.8 million shares of its common stock and about 850,000 shares of a redeemable nonvoting, nonconvertible preferred stock.

Based on's closing share price today, the deal is valued at $10.6 million. The shares issued are worth $13.6 million minus the $3 million investment.

The deal, which is expected to close by the end of June, comes as the e-commerce market on the whole has been hounded by weak investor interest and bleeding losses.

The online pet market, which includes such competitors as, Petco-backed and, has long been expected to consolidate as the industry faces razor-thin margins and increasing competition--which is exacerbated online through the similarities in the companies' names.

Shares of are near their all-time low, hovering around $2.

"By acquiring these key assets and strategic relationships, we expect to reap the benefits of consolidation and thus strengthen our position as the online pet category leader," Julie Wainwright, chief executive of, said in a statement. will also Online pet stores throw shoppers a boneform a 2-year strategic marketing relationship with supermarket chain Safeway that will promote through Safeway stores. will also carry the Safeway brand on its Web site.

Visitors to Petstore's site currently find a referring page to that reads: " has teamed up with the leading online pet site,, to bring you even better selection, information and service! You can now find us at

"All orders placed on or before June 13, 2000, will be processed and shipped by," the site says.

In May, PC Data Online reported that leads the online pet sales market by ranking fourth among all e-tailers, and that it increased its buyers from 144,000 in April to 355,000 buyers in May. president Michela English will join the board of directors. San Francisco-based is backed by Amazon and, among others.

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