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Free ISP NetZero buys teen e-commerce service

The free Internet service provider is acquiring teen payment site RocketCash to broaden its e-commerce strategy, the company says.

Free Internet service provider NetZero is acquiring teen payment site RocketCash to broaden its e-commerce strategy, the company said today.

The Westlake Village, Calif.-based company said it would issue about 5.6 million in stock for the start-up, worth approximately $36.4 million at yesterday's closing price. The deal is expected to close during the third quarter of 2000.

Through the deal, NetZero gains access to RocketCash's online payment technology and teen audience. RocketCash, based in Mountain View, gives teens a way to buy goods online without using a credit card; shoppers can pool money from gift certificates, personal checks, promotional "points" programs, money orders and cash into one online account.

The deal follows NetZero's overall strategy to bolster advertising and e-commerce efforts. In May, the company agreed to buy advertising technology start-up Simpli.com for $23 million in stock. NetZero, which offers advertising and commerce-supported Internet access, plans to strengthen its consumer-targeting technology through the acquisition.

The company's stock price has languished despite "buy" ratings from First Albany, ING Barings and Chase H&Q in recent months. Shares were down 63 cents to $5.88 in early afternoon trading on the Nasdaq today.

NetZero earlier this year signed an advertising deal with General Motors worth more than $100 million over four years. Analysts expect the company to ink similar deals later this year.

NetZero said it plans to maintain the RocketCash brand and to license the technology to other online businesses.